India’s central bank, the Reserve Bank of India (RBI), has proposed taking a “phased approach” to the launch of the country’s central bank digital currency (CBDC). The RBI also said it is studying the pros and cons of launching a digital rupee in India.
RBI on the upcoming launch of the digital rupee
The Reserve Bank of India released its annual report for 2021-22 on Friday. The Central Bank of India (CBDC) digital currency is among the many topics covered in the report.
“The design of CBDC must be consistent with monetary policy, financial stability and the efficient operation of currency and payment systems,” the report states, stating:
The Reserve Bank proposes taking a phased approach to adopting CBDC, moving step-by-step through the stages of proof of concept, pilot, and go-to-market.
In addition, the report reveals that the central bank “studied the pros and cons of [the] Introduction of CBDC in India.”
The RBI further stated that “the appropriate design elements of CBDCs that could be implemented with little or no disruption are under review”.
India’s Finance Minister Nirmala Sitharaman announced the central bank’s plan to launch a digital currency in February while unveiling the 2022-23 Union budget.
The RBI report concludes:
A corresponding amendment to the RBI Act of 1934 was incorporated into the Finance Act of 2022. The Finance Act of 2022 was enacted and provides a legal framework for CBDC adoption.
In April, RBI Deputy Governor T. Rabi Sankar said central banks would roll out a CBDC “in a very calibrated, phased manner, assessing the impact across the board.”
Meanwhile, RBI has maintained an anti-crypto stance. Governor Shaktikanta Das warned against investing in the crypto market last week following the collapse of cryptocurrency Terra (LUNA) and stablecoin Terrausd (UST).
In February, the central bank said that cryptocurrency poses a major threat to India’s macroeconomic and financial stability. The bank’s deputy governor also stated that banning cryptocurrency was “most advisable” for India and regulation was “pointless.”
Nonetheless, the Indian government has not decided on the country’s crypto policy, but crypto earnings are currently taxed at 30%. In addition, a 1% withholding tax (TDS) will soon come into effect in India.
What are your thoughts on how RBI plans to launch its digital currency? Let us know in the comments section below.
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