New Delhi: Reserve Bank of India (RBI) worked in the phase of the introduction of the currency, Deputy Governor of RBI T Rabi Sankar said on Thursday.
Delivering a speech at online discussions, Sankar said that the idea of the central bank’s digital currency (CBDC) was ripe, and many central banks in the world worked towards him.
RBI is considering a particular pilot program for the proposed CBDC and is in the process of launching it in wholesalers and retail segments in the near future, he added.
The central bank has explored the pros and cons of the introduction of CBDCs since some time now.
Sankar assured that RBI was checking cases that could be implemented with little or no disruption in the banking system and monetary policy.
What is Cbdcaccording to RBI, CBDC is a legal tender issued by the form of a central digital banking.
It is the same as the fiat currency and can be exchanged for one-to-one with fiat currency, only the form is different.
However, it is not comparable to the personal virtual currency located on substantial opportunities for the historical concept of money.
In his speech, Sankar noted that the CBDC was the same as the currency issued by the central bank but took a different form of paper (or polymers).
“This is a sovereign currency in electronic form and it will appear as an obligation (circulating currency) on the central bank balance sheet.
The underlying technology, the form and use of CBDC can be formed for specific requirements.
CBDCs must be exchanged for trenches.
With cash , “he said.
Why the CBDC neededankar said that developing domestic CBDC can provide the public using that every personal virtual currency offer and so far it can maintain public preferences for rupees.
“It can also protect the public from the level of abnormal volatility, some of these virtual currency experiences,” he added.
The introduction of CBDC, he said, has the potential to provide significant benefits such as reduced dependence on cash, higher seigniorage because of lower transaction costs and reduce the risk of settlement.
In addition, payments using the currency are final and thus reduce the risk of completion in the financial system.
This will also have the potential to allow globalization of more real-time and cost-effective payments, deputy governor noted.
CBDC in India Ministry of Finance, in 2017, has established a high-level inter-minister committee to examine policies and legal frameworks for virtual currency / Crypto regulations.
Have recommended the introduction of CBDCs as a digital form of fiat money in India.
The introduction of CBDC, he said, has the potential to provide significant benefits such as reduced dependence on cash, higher seigniorage because of lower transaction costs and reduce the risk of settlement.
“The introduction of the CBDC might lead to a tender-based payment option that is stronger, efficient, tertured, regulated and legal.
There are relevant risks, no doubt, but they need to be carefully evaluated towards potential benefits,” he said.
The deputy governor said it would be an RBI effort, “when we move forward towards the Indian CBDC”, to take the necessary steps that will repeat the position of state leadership in the payment system.
The challenge in the introduction of the CBDC in India Deputy Governor of RBI notes that the introduction of the CBDC will require a legal framework that is possible because legal provisions are currently made in the form of currency in the form of paper.
Sankar emphasizes that the consideration of the image board and important stakeholder deliberations, while technology challenges must also be seen.
Some of the main problems in the RBI examination include, the scope of CBDC, the underlying technology, the mechanism of validation and distribution architecture.
He further said legal changes will be needed because the current provisions have been made in the currency in the physical form under the Bank of India’s reserve law.
He also notes that consequential amendments will be needed in coins, foreign management laws (FEMA) and information technology laws.
“As said, every idea must wait for the time.
Maybe the time for CBDCs is near,” he said.
Furthermore, Sankar highlighted some risks associated with the digital currency, such as sudden money from banks that were stressed.
“There are related risks …
but they need to be carefully evaluated to the potential benefits,” he added.
(With input from agency)
Working on a gradual introduction to digital currency: Vice RBI Guv
