The government has no plans to introduce cryptocurrency, and the Reserve Bank of India (RBI) is working on a phased implementation strategy for the introduction of Central Bank Digital Currency (CBDC), the Parliament was informed on Tuesday.
In a written response, Minister of State (MoS) for Finance Pankaj Chaudhary stated, “RBI does not issue a cryptocurrency.” Traditional paper currency is legal tender and is issued by the RBI in accordance with the provisions of the RBI Act, 1994. CBDC refers to a digital version of traditional paper currency.”
According to a recent Deloitte report, the Reserve Bank’s proposed CBDC will play an important role in speeding up transactions and lowering the cost of money.
According to the report, CBDCs are likely to drive efficiencies and effectiveness in a jurisdiction’s financial system by ensuring that its customers have access to secure digital currency. CBDCs will provide customers with a sovereign option as opposed to other much less secure digital devices, which may result in less dependable funds, a comparatively risky retailer of worth, and possibly erode financial and monetary stability.
In 2022-23, the RBI intends to launch a central bank-backed digital currency using blockchain technology.
CBDC is a digital currency, but it is not comparable to the personal digital currencies or cryptocurrencies that have proliferated over the last decade. Because there is no issuer, private digital currencies do not represent any particular person’s debt or liabilities.
CBDCs, as a financial services innovation, are likely to play a pivotal role in shaping the ‘way forward for value transfer,’ according to the report, which also stated that a significant proportion of central banks worldwide are currently in various stages of their research into launching their national digital currencies.
“CBDCs, because of their inherent potential to change the way value is transferred, provide a more resilient, innovative, and competitive payment system for households, businesses, and economies,” said Monish Shah, an associate at Deloitte India.