Indian Central Bank Set to Explore Digital Rupee as Cryptocurrency Continue to Gain Popularity
January 26, 2021 1:27 PM
In a booklet published recently by the Reserve Bank of India. The central bank admitted to the increased popularity of cryptocurrency in recent years and also stated that it was exploring the need for a central bank digital currency (CBDC).
The document which covers “the journey of payment and settlement systems in India during the second decade of the millennium, viz., from the beginning of 2010 till the end of 2020,” the RBI described.
A section of the booklet reads:
Private digital currencies (PDCs) / virtual currencies (VCs) / cryptocurrencies (CCs) have gained popularity in recent years. The regulators and governments in India have been sceptical about these currencies and are apprehensive about the risk involved.
The RBI is exploring the possibility as to whether there is a need for a digital version of rupee and in case there is, then creating an operational structure to It. the central bank confirmed:
The booklet also describes a central bank digital currency CBDC as “a legal tender and a central bank liability in digital form denominated in a sovereign currency and appearing on the central bank’s balance sheet.” The central bank also added that: “Innovations are rapidly changing the payments industry.
With increased popularity of cryptocurrencies it has become a trend as central banks around the world is beginning to examine whether they could leverage on technology and issue fiat money in a digital form.
However, the India government still does not have a regulatory framework for cryptocurrency in place. A draft bill was submitted to the finance ministry in early 2019 but the bill has still not been introduced by the government.
The digital rupee has been mentioned by India central bank in the past. In Q4 2019, The RBI Governor Shaktikanta Das said “it is an area where the Reserve Bank will certainly look at seriously at an appropriate time.”