India's Central Bank Plans Graded Implementation Of CBDC
The Reserve Bank of India announced a graded CBDC launch in line with the country's monetary policy and financial stability
By Shashank Bhardwaj
The Reserve Bank of India (RBI) has stated that it would implement its central bank digital currency (CBDC) plans via a graded approach and in step with the country's monetary policy.
RBI’s Annual Report 2021-22, released last week, said, “The Reserve Bank proposes to adopt a graded approach to introducing CBDC, going step-by-step through stages of Proof of Concept, pilots and the launch.” A proof of concept is the initial stage where the idea is put to the test, and the test result is verified to ensure that the implementation would yield results the same as intended.
“The Reserve Bank is engaged in the introduction of a central bank digital currency (CBDC) in India. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems,” the report further stated.
In February 2022, following the budget proposals for CBDC introduction in the next fiscal year, Prime Minister Narendra Modi said he was optimistic about the CBDC launch and eagerly awaits its introduction as a medium to strengthen the digital economy via revolutionising the fintech industry.
While attributing the information to an RBI report, media reports stated that the advent of CBDC, scheduled for the 2022-23 fiscal year, will be in tandem with the financial stability and currency and the payments systems. A senior RBI official claimed that separate Indian CBDC systems would be introduced for wholesale and retail segments.
Indian CBDC or digital rupee will use blockchain and other allied technologies. In the Annual Budget 2022-23, Finance Minister Nirmala Sitharaman promised to bring the CBDC, pegged at par with the Indian rupee, into the monetary system, in the current financial year.
Earlier, the Indian government contemplated introducing a bill in the parliament to impose a ban on digital currencies and adding an official digital coin or Indian CBDC. The authorities deferred the bill twice - in the first budget session of February and the 2nd winter session in November last year. Eventually, it junked the plan of banning or regulating cryptocurrencies in the meantime and, as an alternative, amended the RBI act, 1934, to introduce a CBDC.
Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash