New Delhi: Reserve Bank is working on a gradual implementation strategy for its own digital currency and is in the process of launching it in the wholesale and retail segments in the near future, Deputy Governor of RBI T Rabi Sankar said on Thursday.
He said the idea of the central bank’s digital currency (CBDC) was ripe, and many central banks in the world worked towards him.
Furthermore Sankar said CBDC was needed to protect consumers from “scary volatility levels” which were seen in some virtual currencies that did not have sovereign support.
He said the central bank throughout the world was involved in exploring CBDC, and some countries have also introduced these concepts.
“Maybe the idea for CBDCs is near,” he said while participating in online discussions organized by Vidhi Center for legal policy.
In India, a high-level inter-minister committee formed by the Ministry of Finance has examined legal policies and frameworks, and has recommended the introduction of CBDC as a digital form of Fiat money in this country.
“Like other central banks, the RBI has also explored the pros and cons of the CBDC introduction since some time,” he said, and added that countries have implemented CBDC specific goals.
The reserve bank, he said, is currently working towards a gradual implementation strategy and checks cases that can be implemented with little or no disruption to the banking system and monetary policy.
“…
do pilots in wholesalers and retail segments may be possible in the near future.
So, some progress has been made.
You know we might be able to find this in the near future,” Sankar said.
Deputy Governor further said legal change will be needed because the current provisions have been made in currency in the physical form under the Bank of India’s reserve law.
He said consequential amendments would also be needed in coins, foreign management laws (FEMA) and information technology laws.
“These are some things that …
we look internally,” he added.
Deputy Governor further said some of the main problems examined by the RBI include the scope of CBDC, the underlying technology, and a validation mechanism.
He also highlighted some risks associated with the digital currency, such as sudden money flights from a stressful bank.
“There are related risks …
but they need to be carefully evaluated to the potential benefits,” he added.
RBI contemplates the launch of the digital currency pilot in the near future: Deputy Governor
