India’s central bank, the Reserve Bank of India (RBI), has proposed taking a “graduated approach” to launch the country’s central bank digital currency (CBDC). The RBI also said it was exploring the pros and cons of introducing a digital rupee in India.
RBI on the upcoming digital rupee launch
The Reserve Bank of India released its annual report for 2021-22 on Friday. India’s Central Bank Digital Currency (CBDC) is among the many topics discussed in the report.
“CBDC design should be consistent with monetary policy, financial stability, and efficient operations of monetary and payment systems,” the report details, stating:
The Reserve Bank proposes to take a graduated approach to introducing CBDC, moving step-by-step through the proof-of-concept, pilots, and launch stages.
In addition, the report reveals that the central bank “explored the pros and cons of [the] introduction of CBDC in India.
The RBI further clarified that “appropriate design elements of CBDCs that could be implemented with little or no disruption are under review.”
Indian Finance Minister Nirmala Sitharaman announced the central bank’s plans to launch a digital currency in February during the presentation of the Union Budget 2022-23.
The RBI report concludes:
A suitable amendment to the RBI Act 1934 has been included in the Finance Bill 2022. The Finance Bill 2022 has been enacted, providing a legal framework for the launch of the CBDC.
In April, RBI Deputy Governor T. Rabi Sankar said central banks would proceed with the launch of a CBDC “in a very calibrated and graduated manner, assessing the impact all along the line.”
Meanwhile, the RBI maintained an anti-crypto stance. Governor Shaktikanta Das last week warned against investing in the crypto market after the collapse of the cryptocurrency terra (LUNA) and stablecoin terrausd (UST).
In February, the central bank said cryptocurrency posed a big threat to India’s macroeconomic and financial stability. The bank’s Deputy Governor also said the cryptocurrency ban is “most advisable” for India and the regulation is “futile”.
Nevertheless, the Indian government has not decided the country’s crypto policy, but crypto income is currently taxed at 30%. Additionally, a 1% withholding tax (TDS) will soon come into effect in India.
What do you think of how the RBI plans to launch its digital currency? Let us know in the comments section below.
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