Indians are eagerly awaiting the launch of the Digital Rupee CBDC which is expected to be rolled out for the current fiscal year 2022-23. The Reserve Bank of India (RBI) has released a report stating that this CBDC will be aligned with the country’s existing monetary policies as well as payment systems. The RBI, which will have control over this digital rupee, aims to adopt a graduated approach in accordance with the financial structure of India.
A central bank digital currency (CBDC) is a blockchain-based payment solution, regulated by the central bank. Although it functions 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 take a graduated approach to the introduction of CBDC, moving step-by-step through the proof-of-concept, pilots and launch stages. The design of the CBDC must be consistent with the stated objectives of monetary policy, financial stability, and the efficient functioning of monetary and payment systems,” RBI said in its report.
The development comes just some time after a senior RBI official allegedly claimed that the CBDC would be introduced separately for the wholesale and retail sectors.
On several occasions, Nirmala Sitharaman, Finance Minister of India, has noted that the digital rupee will expand payment options for Indians.
The Indian government is also betting on the CBDC to expand its efforts towards financial inclusion for those who are still not part of Indian banking systems. Work on Digital Rupee is ongoing and the Indian government does not wish to rush its development and deployment processes.
In April, RBI Governor T Rabi Sankar said a nuanced and calibrated approach was essential for the launch of India’s first digital currency as it would have various implications for the economy and monetary policy.
Several other countries like the United States, Russia, China, Jamaica, Nigeria, and Mexico are also working on their respective CBDCs.
Paolo Ardoino, the CTO of Tether, had recently stated that the main role of CBDCs is to use the private blockchain as a cutting-edge, cost-controlled technological 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.
Of these 86 nations, nine countries have already launched their CBDC while 15 are in the pilot phase.