Exploring Possibility Of Central Bank Digital Currency In India, Says RBIPage Visited: 10
In India, the regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks.
January 25, 2021 / 07:34 PM IST
The Reserve Bank of India (RBI) on January 25 said it is examining if there is a need to introduce central bank digital currency (CBDC) in the country and, if yes, how to operationalise it.
The RBI’s statement comes in the backdrop of private digital currencies, virtual currencies, and cryptocurrencies gaining popularity in recent years. In India, the regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks.
“Nevertheless, the RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalise it,” the RBI said releasing a booklet of payment systems in India.
CBDC is 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. It is in the form of electronic currency which can be converted or exchanged at par with similarly denominated cash and traditional central bank deposits.
“Innovations are changing the payments space rapidly. This has made central banks around the world to examine whether they could leverage on technology and issue fiat money in digital form,” the RBI said.
In India too, there have been discussions around the subject.
In February, 2020 RBI bulletin, the central bank, citing a survey of central banks conducted by the Bank for International Settlements, had said some 80 percent of the 66 responding central banks have started projects to explore the use of CBDC in some form.
“These central banks are contemplating and studying the potential benefits and implications of CBDC in the economy. We discuss below the efforts being made in central banks of China and Sweden in this regard,” the RBI Bulletin had said then.