The Reserve Bank of India (RBI), the central bank of India, has published a booklet containing sections on cryptocurrencies and the digital rupee. The central bank acknowledged that cryptocurrency has become popular in recent years and confirmed that it is exploring the demand for central bank digital currency.
The Reserve Bank of India says that cryptocurrency is popular and is exploring the digital rupee
The Central Bank of India issued a “Payment System Handbook” on Monday, which has a section on Central Bank Digital Currency (CBDC). The Reserve Bank of India said that the document covers “the history of India’s payment and settlement system in the second decade of this century, from the beginning of 2010 to the end of 2020.”
Part of the manual is:
In recent years, private digital currency (PDC)/virtual currency (VC)/encrypted currency (CC) have gained popularity. In India, regulators and governments have been skeptical of these currencies and worried about the risks involved.
However, the central bank confirmed:
Nonetheless, the Reserve Bank of India is exploring the need for a digital version of fiat currency and the possibility of how to operate the fiat currency if possible.
The RBI manual describes CBDC as “fiat currency and central bank liabilities in digital form denominated in sovereign currencies and appearing on the central bank’s balance sheet”. The central bank added: “Innovation is rapidly changing the payment space. This has caused central banks around the world to study whether they can use technology and issue fiat currencies in digital form.”
This is not the first time the Central Bank of India has mentioned the digital rupee. In December 2019, Shaktikanta Das, Governor of the Reserve Bank of India, said: “The Reserve Bank will definitely consider this area seriously in due course.”
India still does not have a regulatory framework for cryptocurrencies. The draft bill was submitted to the Ministry of Finance in early 2019, but the government has not yet proposed the bill. At the same time, the country’s Supreme Court lifted the central bank’s banking restrictions on the cryptocurrency industry in March last year. Recently, there have been reports that the Central Economic Intelligence Agency under the Ministry of Finance has proposed to impose an 18% Goods and Services Tax (GST) on Bitcoin transactions.
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