The RBI (Reserve Bank of India), while further remarking on the decision of the authorities to launch an in-house CBDC (central bank digital currency) in 2022-23, suggested a 3-step strategy to introduce a CBDC with no or little disruption caused to the conventional system of finance. Nirmala Sitharaman (the finance minister of India), while arguing about this year’s budget, discussed the digital rupee’s launch to incorporate a huge advancement in digital finance.
On Friday, in the yearly report issued on the behalf of the country’s central bank, the advantages as well as, harms of launching a CBDC were disclosed by the RBI. In the very report, the central bank emphasized that there is a requirement for the CBDC of India to run along with the targets of the country dealing with effective activities of payment systems and currencies, financial stability, as well as monetary policy.
Keeping this requirement in view, the central bank is at the moment exploring a CBDC’s diverse design features that can have their applicability within the present fiat system of the country without paving the way for any disruptions. A legal agenda has also been provided for a digital rupee by the Indian Finance Bill 2022 which implemented up to 30% tax on cryptocurrencies in terms of unrealized profits.
As per the report, the RBI platform will utilize an organized approach for a CBDC’s launch. It will be a stepwise procedure moving through different Proof-of-Concept phases, pilots as well as the introduction finally. At this time, as half of 2022 has passed, the project is at its proof-of-concept phase, with the central bank going through a process of confirming the functionality as well as the feasibility of a CBDC’s introduction.
On 17th May, officials from the RBI reportedly cautioned against the adoption of crypto while referring to the hazards associated with the Indian economy’s dollarization. It was formerly reported that in line with the findings of the Economic Times, the chief officials from the country’s central bank – taking into account Shaktikanta Das – raised objections concerning the dominance of the United States dollar in the crypto world.
An anonymous official was of the view that approximately the entirety of the cryptos are now influenced by the dollar and are introduced on the behalf of some foreign bodies which may consequently drive toward the dollarization of a proportion of the economy in India, indicating a hazard posed to the sovereign interest of the country.