The Digital Rupee will look to emulate the success of China’s Digital Yuan
The governor of the Reserve Bank of India (RBI), the country’s central bank, has expressed support for a government-backed central bank digital currency (CBDC) to replace privately-issued cryptocurrencies in India, such as Bitcoin.
Shaktikanta Das told Bloomberg yesterday that India was “very much in the game” and is looking to emulate China’s Digital Yuan for its 1.4 billion population. Das further revealed that the Digital Rupee was a major focus project for the central bank.
The Digital Rupee project has been mentioned frequently by Indian government officials and RBI authorities in the past few weeks, with reports suggesting the central bank is currently finetuning the technological and procedural protocols of the sovereign digital currency system. No official release date has been announced by the RBI.
Central Bank Digital Currency is the digital representation of the fiat money issued by a country’s central bank to enable cashless transactions, speed up payments, and reduce associated costs. China’s Digital Yuan is anticipated to be the first digital version of a currency issued by a major central bank.
Along with advantages in security and tracking of transactions, CBDCs will also represent a revolution in the way currencies will function, bringing an ever-growing number of people onto a digital banking platform. The digital currency will also affect the monetary policies of the countries that make the switch (or those that are considering the same), which will have a considerable impact on the way money is exchanged not just within a country, but also between countries.
Explaining the anti-cryptocurrency stance of India’s central bank, the RBI chief maintained that privately-issued cryptocurrencies are a threat to the country’s financial stability. Das added that these concerns of the RBI had been communicated to the central government and could shape the incoming crypto regulations.
India is expected to pass a bill in the parliament banning the holding of any transactions using cryptocurrencies. Prime Minister Narendra Modi’s administration is proposing to prohibit all private cryptocurrencies in the country and create a framework for an official digital currency. Reports suggest that the crypto holders in the country will be given a period of six months to abide with the blanket ban and liquidate their assets.
Crypto stakeholders are once again trying to make a case for themselves in front of the government. In March 2020, the Supreme Court reversed the RBI’s ban on commercial banks servicing crypto exchanges. Explaining the damage that can be caused by such a ban again, former Coinbase Chief Technology Officer (CTO) Balaji Srinivasan called the upcoming ban akin to banning the internet.