The Reserve Bank of India (RBI), the country’s central bank, is attempting to “phase in a central bank digital currency (CBDC) in both wholesale and retail segments.” The RBI Act of 1934 has been modified as needed to permit the central bank to test and issue a digital currency.
A Reserve Bank of India (RBI) official and the minister of state in the Ministry of Finance have independently provided an update on the central bank’s progress in issuing a central bank digital currency (CBDC).
RBI Executive Director Ajay Kumar Choudhary was quoted by local media as saying during a keynote address at the PICUP Fintech Conference and Awards on Wednesday:
RBI is working on phased implementation of a central bank digital currency (CBDC) in both wholesale and retail segments.
In a similar vein, Pankaj Chaudhary, a minister of state in the Ministry of Finance, informed India’s Rajya Sabha on Tuesday that “RBI has started the work for a phased implementation of the announcement made… in the budget speech 2022-23.”
The launch of the CBDC for India was announced in the Union Budget for 2022–2023 by Indian Finance Minister Nirmala Sitharaman. After the Finance Bill 2022 passed, the RBI Act, 1934 underwent the necessary amendments to permit the central bank to pilot and issue a CBDC.
The central bank believes that “CBDCs would actually be able to kill whatever little case there could be for private cryptocurrencies,” according to RBI Deputy Governor T. Rabi Sankar, who made the statement in June. The Indian government and the central bank refer to non-state-issued cryptocurrencies, including bitcoin (BTC) and ether (ETH), as private cryptocurrencies. The RBI also warned in May that crypto could lead to the dollarization of a part of the Indian economy.
Earlier this month, RBI Governor Shaktikanta Das said: “Cryptocurrencies are a clear danger. Anything that derives value based on make-believe, without any underlying, is just speculation under a sophisticated name.”
The Indian central bank has repeatedly stated that cryptocurrencies should be prohibited. However, the country’s finance minister told parliament earlier this week that “any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards.”