August 5, 2021

The World Stock Markets Tips & Targets, News, Views & Updates

The World Stock Markets Tips & Targets, News, Views & Updates

RBI eyeing ‘phased introduction’ of digital currency: Deputy Governor

The Reserve Bank is working on a phased implementation strategy for its own and is in the process of launching it in wholesale and retail segments in the near future, Deputy Governor T Rabi Sankar said on Thursday.

He said the idea of Central Bank (CBDC) is ripe, and many central banks in the world are working towards it.

Sankar further said CBDC is needed to protect consumers from the “frightening level of volatility” seen in some of the virtual currencies which have no sovereign backing.

He said central banks across the globe are engaged in exploring CBDCs, and a few countries have also introduced such concepts.

“Perhaps the idea for CBDCs is near,” he said while participating in an online discussion organised by The Vidhi Centre for Legal Policy.

In India, a high level inter-ministerial committee constituted by the Ministry of Finance has examined the policy and legal frameworks, and has recommended the introduction of CBDC as a digital form of fiat money in the country.

“Like other central banks, has also been exploring the pros and cons of introduction of CBDC since quite some time,” he said, and added generally countries have implemented specific purpose CBDCs.

The launch of a general-purpose CBDC for population scale is being considered, and is working towards a phased introduction strategy and examining use cases with little or no disruption of India’s banking and monetary systems

“…conducting pilots in wholesale and retail segments may be a possibility in the near future. So, some progress has been made. You know we could likely come up with this in the near future,” Sankar added.

The Deputy Governor further said legal changes would be necessary as the current provisions have been made keeping in mind currency in a physical form under the Reserve Bank of India Act.

He said consequential amendments would also be required in the Coinage Act, Foreign Exchange Management Act (FEMA) and Information Technology Act.

“These are some of the things that.. we are looking at internally,” he added.

The Deputy Governor further said some of the key issues being examined by the RBI include scope of CBDCs, underlying technology, and validation mechanism.

He also highlighted some the risks associated with digital currencies, like sudden flight of money from a bank under stress.

“There are associated risks…but they need to be carefully evaluated against the potential benefits,” he added.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Share This :