Central Bank Digital Currency likely to be launched in near future: RBI Deputy Governor
Deputy RBI Governor T Rabi Shankar stated that conducting pilots of the digital currency in wholesale and retail segments may be a possibility in near future.
The Reserve Bank of India is considering launching Central Bank Digital Currency (CBDC) in the near future. This was informed by Deputy RBI Governor T Rabi Shankar.
The deputy RBI governor said that the apex bank is currently working towards a phased implementation strategy of the digital currency and examining use cases, which can be implemented with little or no disruption.
He stated that conducting pilots of the digital currency in wholesale and retail segments may be a possibility in near future. This was shared during a webinar organised by the Vidhi Centre for Legal Policy, New Delhi.
High-Level Inter-Ministerial Committee constituted by Ministry of Finance in November 2017 to examine the policy and legal framework for the regulation of virtual currencies had recommended the introduction of CBDC.
•This is the first time that there has been a clear indication that the bank is likely to launch a digital currency soon. Previously, it was stated that the apex bank is studying the idea.
•Legal changes are expected to be made to the South Asian nation’s foreign exchange rules and IT laws.
How will the digital currency help the Indian economy?
•The digital currency is likely to lower the Indian economy's reliance on cash, which will, in turn, enable cheaper and smoother international settlements.
•It will also protect people from the volatility of private cryptocurrencies.
•The RBI Deputy Governor stated that every idea has to wait for its time and the time for a central bank digital currency (CBDC) is near. He said that the RBI has to carefully evaluate the risks.
•He said that the RBI's key endeavor is that India’s digital currency can reiterate its leadership position in payment systems of the world.
What is CBDC?
•The central bank digital currency (CBDC) is a legal tender and a central bank liability in digital form.
•It is denominated in a sovereign currency and appears on the central bank's balance sheet.
•The currency is in the form of electronic currency and can be converted or exchanged at par with similarly denominated cash and traditional central bank deposits.
Digital Currencies in other countries
The European Central Bank stated last week that it will begin a 24-month “investigation phase”, which if successful, could lead to the creation of a digital euro by 2025.
China’s central bank also said last week that its digital yuan trial had reached $5.3 billion in transaction value by the end of June 2021.