The Central Bank of India, the Reserve Bank of India (RBI), has published a brochure with a section on cryptocurrency and the digital rupee. The central bank acknowledged that cryptocurrencies have grown in popularity in recent years and confirmed that it is studying the need for a central bank digital currency.
RBI says crypto has grown in popularity and is researching the digital rupee
The Central Bank of India published a “Payment Systems Brochure” on Monday with a section on Central Bank Digital Currencies (CBDCs). The document deals with “the journey of the payment and settlement systems in India during the second decade of the millennium, namely from the beginning of 2010 to the end of 2020”, the RBI described.
One section of the brochure reads:
Private digital currencies (PDCs) / virtual currencies (VCs) / cryptocurrencies (CCs) have gained popularity in recent years. In India, regulators and governments have been skeptical of these currencies and are concerned about the risks involved.
However, the central bank confirmed:
Nevertheless, the RBI is examining the possibility of whether a digital version of the fiat currency is required and how this can be operationalized.
In the RBI brochure, a CBDC is described as “legal tender and central bank liability in digital form, denominated in a local currency and appearing on the central bank’s balance sheet”. The central bank added, “Innovations are rapidly changing the payment space. This has led central banks around the world to look into whether they can use technology and spend fiat money in digital form. “
This is not the first time the Central Bank of India has mentioned the digital rupee. In December 2019, RBI Governor Shaktikanta Das said: “It is an area that the reserve bank will certainly give serious thought to in due course.”
India still does not have a legal framework for cryptocurrency. A bill was submitted to the Treasury Department in early 2019, but the government did not submit the bill. Meanwhile, the country’s Supreme Court lifted the central bank’s banking restriction on the crypto industry in March last year. Recently there were reports that the Central Economic Intelligence Bureau, a branch of the Treasury Department, proposed to impose an 18% tax on goods and services (GST) on bitcoin transactions.
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