Indians are eagerly awaiting the launch of the Digital Rupee CBDC that is expected to be rolled-out for the current fiscal 2022-23. The Reserve Bank of India (RBI) has released a report stating that this CBDC will be in alignment with the country’s existing monetary policies as well as payment systems. The RBI, which will have a control on this Digital Rupee, aims to take a graded approach in accordance with the financial structure of India.
A Central Bank Digital Currency (CBDC) is a blockchain-based payments solution, regulated by the central bank. While it works like a typical cryptocurrency and facilitates instant, high value digital payments, transactions on CBDCs are traceable and monitored by the government.
“The Reserve Bank proposes to adopt a graded approach to introduction of CBDC, going step by step through stages of Proof of Concept, pilots and the launch. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems,” RBI said in its report.
The development comes just some time after a senior RBI official reportedly claimed that the CBDC will be introduced separately for wholesale and retail sectors.
On several occasions, Nirmala Sitharaman, India’s finance minister, has noted that the Digital Rupee will expand payment options for Indians.
The government of India is also betting on the CBDC to expand its efforts for bringing-in financial inclusion for those who are still not a part of India’s banking systems. The work on Digital Rupee is underway and the government of India does not wish to rush through its development and roll-out processes.
In April, RBI Governor T Rabi Sankar had said that a nuanced and calibrated approach is essential for launch of India’s maiden digital currency as it would have various implications for the economy and monetary policy.
Several other nations like US, Russia, China, Jamaica, Nigeria, and Mexico are also working on their respective CBDCs.
Paolo Ardoino, the CTO of Tether, had recently said that the main role of CBDCs is to employ private blockchain as a state-of-the-art, cost-controlled technology infrastructure in which the majority of bank transfers and credit/ debit card transactions will be carried out.
According to the Atlantic Council’s CBDC tracker, 109 countries including India are currently in the process of developing their sovereign digital currency, a number that has doubled since May 2020.
Out of these 86 nations, nine countries have already launched their CBDC while 15 are in the pilot phase.