India’s central bank, Reserve Bank of India (RBI) has proposed to adopt a “graded approach” to launch the country’s central bank digital currency (CBDC). RBI also said that it is exploring the pros and cons of introducing the digital rupee in India.
RBI on Upcoming Digital Rupee Launch
The Reserve Bank of India on Friday released its annual report for 2021-22. India’s central bank digital currency (CBDC) is one of the many topics discussed in the report.
“The design of a CBDC must be consistent with monetary policy, financial stability and the efficient operation of currency and payment systems,” the report details, detailed:
The Reserve Bank proposes to adopt a gradual approach to the introduction of CBDCs, going through a phase-by-stage proof of concept, pilot and launch.
Furthermore, the report suggests that the central bank is “exploring the pros and cons of” [the] Introduction of CBDC in India.”
The RBI further elaborated that “suitable design elements of CBDCs that can be implemented with little or no disruption are being examined.”
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.
Conclusion of the RBI report:
An appropriate amendment to the RBI Act, 1934 has been incorporated in the Finance Bill, 2022. The Finance Bill, 2022 has been enacted, which provides a legal framework for the launch of CBDCs.
In April, RBI deputy governor T. Rabi Shankar said that central banks are going to launch CBDCs “in a very calibrated, graduated manner, assessing the impact of the entire line”.
Meanwhile, the RBI has 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 the stablecoin Terraced (UST).
In February, the central bank said that cryptocurrencies posed a major threat to India’s macroeconomic and financial stability. The bank’s deputy governor also said that it is “most appropriate” for India to ban cryptocurrency and that regulation is “futile”.
However, the Indian government has not decided on the country’s crypto policy but crypto income is currently taxed at 30%. Also, 1% Tax at Source (TDS) will be implemented in India soon.
What do you think about how RBI is planning to launch its digital currency? Let us know in the comments section below.
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