Nirmala Sitharaman, the union finance minister, announced that the RBI has decided to launch the Central Bank Digital Currency (CBDC) in FY23.
Blockchain technology will power the CBDC, she said. “The RBI will use Blockchain and other technologies to issue a digital rupee starting in 2022-23, which will boost the economy, said Sitharaman in her Union Budget 2022-23 speech.
A virtual currency is in the process of being launched by the RBI. The CBDC will be a digital version of fiat money that will coexist with hard cash. The move on CBDC comes at a time when private virtual currencies, such as cryptocurrencies, are experiencing a boom.
There are currently a few CBSCs, and those that do exist are in proof-of-concept stages. Most central banks are interested in digital currencies, more than 80% of them.
In September 2021, Tajikistan announced the creation of a CBDC with the Fantom Foundation, and Nigeria was the first African country to launch its CBDC on October 25. China’s digital RMB was the first digital currency issued by a major economy.
An American CBDC, according to a recent report by the Bank of America, would differ from the current digital money since it would be a liability of the US Federal Reserve and not a commercial bank, and so would not have any credit risk or liquidity risk.
A discussion paper on the benefits and risks of a CBDC has also been published by the US Federal Reserve. In a previous announcement, the Indian government said new regulations for cryptocurrency would be introduced during the Winter Session of Parliament, which began on November 29.
However, the ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021′ did not come up during the session.
