Explained: India inches closer to launching a digital currency; 5 key points

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In an interview with CNBC TV18 on February 24, the Reserve Bank of India (RBI) Governor Shaktikanta Das said the RBI is working on procedural issues to launch its digital currency in the country soon, though a date has not been finalised yet. “While we cannot guess the date of its launch, it is receiving our full attention,” he said.

When did the RBI speak of a digital currency last time?

On January 25, the RBI said it was examining if there was a need to introduce central bank digital currency (CBDC) in the country and, if yes, how to operationalise it. The RBI’s statement came against 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.

What is CBDC?

What is the Government stance?

As mentioned above, besides the RBI, even the central government has been sceptical of privately issued cryptocurrencies. In fact, there is a bill lying with Parliament requesting for a complete ban on privately held digital currencies. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is expected to be tabled in Parliament when the Budget session resumes on March 8.

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