RBI's digital currency CBDC is coming
to India
RBI's digital currency CBDC is
coming in the country Tell in the comments. And if you want information about
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India’s central bank, the Reserve
Bank of India (RBI), says a basic central bank digital currency (CBDC) model
must be adopted initially and tested comprehensively to minimize the impact on
the country’s monetary policy and banking system. The Indian apex bank sees
several benefits in launching a digital rupee, including “a potential to
enhance the efficiency of cross-border payments.”
Central bank digital currency,
also known as virtual currencies or digital currency, is the legal tender issued by a central bank in a digital form. “It is the
same as a fiat currency (government printed currency whose value depends on the
strength of the country’s economy) and is exchangeable one-to-one with the fiat
currency,” said Sankar. “Only its form is different.”
The Reserve Bank of India (RBI)
released its “Report on Trend and Progress of Banking in India 2020-21”
Tuesday. The 248-page report has a section on central bank digital currency.
“In its basic form, a central
bank digital currency (CBDC) provides a safe, robust, and convenient
alternative to physical cash,” the Indian central bank described, adding that
“Depending on various design choices, it can also assume the complex form of a financial
instrument.” The RBI continued:
The Reserve Bank of India (RBI)
is currently working towards a phased implementation strategy and examining use
cases that could be implemented with little or no disruption.
Speaking at a webinar organised by the Vidhi Centre for Legal
Policy, T Rabi Sankar, deputy governor, Reserve Bank of India, defined a CBDC
as the legal tender issued by a central bank in a digital form.
It is the same as a fiat currency and is exchangeable
one-to-one with the fiat currency. Only its form is different. "However,
CBDC is not comparable to private virtual currencies," he said.
CBDC is a digital or virtual currency but it is not comparable to the private
virtual currencies that have mushroomed over the last decade. According to the
RBI, private virtual currencies sit at substantial odds with the historical
concept of money. They are not commodities or claims on commodities as they
have no intrinsic value. "Some claims that they are akin to gold seem
opportunistic. Usually, certainly for the most popular ones now, they do not
represent any person's debt or liabilities," said Sankar.
Further, there is no issuer of private virtual currencies. RBI deputy governor
emphasised that VCs are not money (certainly not currency) as the word has come
to be understood historically.
Earlier in April, former MoS for finance and corporate affairs Anurag Thakur
expressed concern over the volatile nature of cryptocurrency prices. But, that
will not happen with CBDC.
CBDC, as per the
RBI, could protect the public from the abnormal level of volatility some of the
VCs experience. "Indeed, this could be the key factor nudging central
banks from considering CBDCs as a secure and stable form of digital
money," said RBI's deputy governor.
He added developing
CBDC could provide the public with uses that any private VC can provide and, to
that extent, might retain a public preference for the rupee as well.
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