The Reserve Bank of India (RBI) is reportedly working towards a phased plan for the implementation of a Central Bank Digital Currency (CBDC).
“Every idea has to wait for its time. Perhaps the time for CBDC is nigh,” RBI Deputy Governor Rabi Sankar said on Thursday, 22 July, The Economic Times reported.
"CBDC will be in the arsenal of most if not all central banks in the world. Setting this up will require careful calibration and a nuanced approach in implementation," Sankar indicated, while delivering a virtual keynote address at the Vidhi Centre for Legal Policy.
He further stated that a pilot to test general-purpose digital currency is on the cards for the near future.
Listing the benefits of that CBDC offers, the deputy governor of RBI noted that the digital currency would minimise the dependence on cash, save the cost of printing money, and create a more robust mechanism for monetary transactions.
What is CBDC?
A panel constituted by the former Union Finance Minister Arun Jaitley proposed the concept of central bank digital currency. The committee stated that CDBC will be digital form of fiat money.
“The concept of electronic central bank money is not new and has existed for a very long time, in the form of reserves deposited by commercial banks and certain other financial institutions at the central bank,” the committee noted.
What is Digital Rupee?
Digital rupee, as the name suggests, is a form of digital currency that might be introduced in the future by the Indian government as a replacement to other crypto forms.
Unlike Bitcoin and other cryptocurrencies, which are based on peer-to-peer network, digital rupee will be monitored within a framework by the Reserve Bank of India.
(With inputs from The Economic Times)