- India will be launching its own digital currency “e-Rupee”.
- e-Rupee will be backed by the Reserve Bank Of India.
- India announced the launch of CBDC in its financial budget for 2022-23.
India came up with its Crypto Regulation Bill in its financial budget for 2022-23. The Finance Minister had announced in the parliament that the government is looking forward to launching its own CBDC which is Central Bank Digital Currency.
In regard to the announcement, the Reserve Bank Of India has issued an official statement. The statement mentions they are launching its own version of digital currency or CBDC.
In the statement note, RBI said,
Currently, we are at the forefront of a watershed movement in the evolution of currency that will decisively change the very nature of money and its functions,” the paper states. “CBDCs are being seen as a promising invention and as the next step in the evolutionary progression of sovereign currency.
The RBI has named its digital currency “e-Rupee”. The statement which was issued as a “concept note” outlines the RBI’s vision for the digital currency and how it will be tested in different phases before the final launch.
According to the concept note, the RBI plans to pilot the launch of the e-Rupee as an additional form or money alongside paper money. The government institution considers e-Rupee as a safe alternative to cryptocurrencies which the Indian government and most countries regard as a risky investment.
RBI also added,
CBDCs will provide the public with [the] benefits of virtual currencies while ensuring consumer protection by avoiding the damaging social and economic consequences of private virtual currencies,
The Indian government has constantly warned its citizens against investing their hard-earned money into cryptocurrencies. The government finds cryptocurrencies dubious which also poses a serious risk like money laundering and terrorist funding. These go unidentified as it becomes impossible for the government to track and regulate monetary policies which in turn puts the financial stability of the country in danger.
The central bank also said,
The potential for [an] anonymous digital currency to facilitate [a] shadow-economy and illegal transactions makes it highly unlikely that any CBDC would be designed to fully match the levels of anonymity and privacy currently available with physical cash,
The RBI will be releasing two versions of digital currency. One will be used for people for daily transactions and payments. The other will be used for major transactions between banks and institutions.