India’s central bank, the Reserve Bank of India (RBI), has proposed to adopt a “graded approach” to launching the country’s central bank digital currency (CBDC). It also stated that it was examining the pros and cons to introducing digital rupees in India.
RBI announces the Upcoming Digital Rupee Launch
Friday, 2021-22 February saw the release of India’s annual report by Reserve Bank of India. India’s central bank digital currency (CBDC) is among the many topics discussed in the report.
“The design of CBDC needs to be in conformity monetary policy, financial stability and efficient operations of currency and payment systems,” the report details, elaborating:
The Reserve Bank will adopt a gradual approach to the introduction of CBDC. It will go through each stage of pilots, proof-of-concept, and launch.
In addition, the report reveals that the central bank “has been exploring the pros and cons of [the] introduction of CBDC in India.”
The RBI further detailed that “the appropriate design elements of CBDCs that could be implemented with little, or no disruption are under examination.”
India’s Finance Minister Nirmala Sitharaman announced the central bank’s plan to launch a digital currency in February while presenting the Union Budget 2022-23.
Conclusions of the RBI Report
In the Finance Bill of 2022, a suitable amendment has been made to the RBI Act 1934. Finance Bill 2022 was enacted. It provides a legal basis for CBDC’s launch.
In April, RBI Deputy Governor T. Rabi Sankar said central banks would go about launching a CBDC “in a very calibrated, graduated manner, assessing impact all along the line.”
The RBI is still anti-crypto. Last week, Governor Shaktikanta das warned about the dangers of investing in crypto markets after the crash of stablecoin terrausd and cryptocurrency terrau (UST)
In February, the central bank said that cryptocurrency is a big threat to India’s macroeconomic and financial stability. The bank’s deputy governor also stated that banning cryptocurrency is “most advisable” for India and that regulation is “futile.”
Nonetheless, the Indian government has not decided on the country’s crypto policy but crypto income is currently taxed at 30%. India is also set to implement TDS, which will be a 1% deducted tax at source.
How do you feel about the RBI’s plans for launching its digital currency? Comment below.
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