RBI to launch India’s own digital currency in 2022-23: finance minister
Margarita M. Phillips
3 min read
Finance Minister Nirmala Sitharaman in her budget speech said that digital currency will lead to a more efficient and cheaper currency management system.
Union Finance Minister Nirmala Sitharaman announced in her budget speech on Tuesday, February 1 that the Reserve Bank of India (RBI) is planning to introduce the digital rupee using blockchain. “Digital currency will lead to a more efficient and cheaper currency management system. Hence, it is proposed to introduce digital rupee using blockchain and other technologies which will be issued by the Reserve Bank of India from 2022 and 2023,” she said.
Last year, the Union government told the Lok Sabha that the RBI was developing a strategy for the gradual implementation of the central bank digital currency by looking at use cases, to avoid disruption. Central Bank Digital Currencies (CBDCs) are legal tender created by a country’s central bank, in digital form. He further said that the RBI had put forward a proposal in October 2021 to amend the Reserve Bank of India Act 1934 to expand the scope of the definition of “banknote” to incorporate currency under digital form.
The central bank has been working on the terms of the central bank digital currency. However, he had reservations about private cryptocurrencies. RBI Governor Shaktikanta Das has previously stated that cryptocurrencies are a very serious concern from a macroeconomic and financial stability perspective. India is joining other countries experimenting with digital legal tender including the United States, China and Europe with digital dollar, e-yuan and digital euro respectively.
Previously, the Indian government was expected to introduce new regulations for cryptocurrency during the winter session of parliament, which started on November 29. The session ended without seeing the “Official Cryptocurrency and Digital Currency Regulation Bill, 2021”.
Read: Explained: The proposed cryptocurrency bill and what it means for India
Reacting to the announcement, Harish Prasad, India Banking Manager, FIS, said it was a much anticipated and positive move. “This will trigger a flurry of preparatory activity among retail payment providers and apps to offer payment mechanisms using digital rupee, similar to what has been seen in China with major digital payments players and apps offering digital yuan payments through their apps,” he said. noted.
“What will be eagerly awaited, however, is clarity on the identification of the owner of digital currency and any associated reporting requirements for payment applications, and whether the anonymity that physical currency allows is an attribute that will be supported in the digital rupee,” he added.
Rajosik Banerjee, Partner and Head of Financial Risk Management at KPMG in India, said: “Digital rupee using blockchain technology will lead to stable, efficient and regulated payments and settlements and lower costs. of transactions. This initiative is expected to boost the digital economy and reduce leakage by reducing dependence on cash.
