As stated by the Indian Minister of State for Finance, Pankaj Chaudhary, the government is not planning on approving cryptocurrencies like Bitcoin and Ethereum, as informed in the Rajya Sabha on Tuesday. Moreover, it was also uttered in the Lower House of the Parliament that the Reserve Bank of India (RBI) is working towards a phased implementation strategy to introduce Central Bank Digital Currency (CBDC).
Pankaj Chaudhary exclaimed that RBI does not issue any cryptocurrency. The traditional paper currency is a legally binding tender issued by the RBI as per the RBI Act, 1994. Therefore, its digital version would be Central Bank Digital Currency(CBDC).
A Deloitte report states that the CBDC issued by the RBI will play an instrumental role in improving transaction speed and reducing the circulation of paper cash. Moreover, CBDC will also boost the efficiency and speed of the payments system in the country. It will allow its users a safe ride towards digital money investment. Compared to the other available payment instruments, CBDC will reduce the incidences of money laundering and lead to monetary and financial stability.
During the announcement of the Financial Budget for 2022-2023, the Finance Minister, Nirmala Sitharaman, talked about the current plans of RBI to introduce a central bank-backed digital currency using blockchain technology. Although CBDC is a digital currency, it is not comparable to cryptocurrency. However, it does resemble crypto in there being no issuer or the non-representation of a person’s debt or liabilities.
Many contemplate that CBDC will play a pivotal role in shaping how funds are transferred. It is why many countries worldwide are currently evaluating their stand on launching digital currencies to improve financial stability and growth. It has also been noted that the printing of notes has declined over the period. In 2019-20, only notes worth Rs 378 crore were printed, which came down to Rs 4012 crore in 2020-21. With CBDC in the picture, it is being postulated that the printing of notes will decline further, a move that will help the country join leagues with established nations looking to develop their digital currency systems.