The digital currency will soon be introduced in the country as part of Digital India’s dream project. The deputy governor of the Central Bank of India himself indicated. There is also a move to ban foreign digital currencies in the country. The Central Bank’s Digital Currency (CBDC) development model will be officially announced soon, with Reserve Bank Deputy Governor B.S. P. Kanungo said.
The RBI is monitoring the performance of major economies around the world and their respective central banks for CBDC projects. The deputy governor said that the central bank would soon take a decision on the issue of official digital currency. Also, he said, the central government and central banks are worried about private cryptocurrencies like bitcoin.
The deputy governor of the Reserve Bank said that the Monetary Policy Committee has been working behind the digital currency for some time. Crypto developments in India have been very slow in the last few years. In 2018, the Reserve Bank of India banned all nationalized banks from trading with crypto exchanges. This led to a huge decline in the investor base. Many crypto exchanges have been put out of business.
However, the Supreme Court ruled that the Reserve Bank’s ban on crypto usage was lifted. This created a new wave among Indian investors and the retail sector grew rapidly. At the same time, it has been reported that investors are optimistic about the emergence of the central bank and the digital currency.
For digital currency, we have already released the document. Governor Shaktikanta Das said, “Our digital payment document shows that the digital currency is moving forward under the RBI.”
The government is also working to develop its own digital currency
Earlier, it was reported that the government was working to develop its digital currency with the support of Reserve Bank of India (RBI). This is not the first time the central bank has talked about such an effort. In the past, several statements have been made by the RBI about bringing in its cryptocurrency. But the fact is that nothing significant has happened in this case except with reference to the top officials of the bank.
While the Reserve Bank cites the need for a central banking digital currency (CBDC), it also clarifies that the government is concerned about the risks surrounding other cryptocurrencies. Why has the government not yet officially banned such currencies? Why did the Supreme Court overturn the ban on banks operating crypto exchanges? The questions are many.
Cryptocurrency is one of the most widely used currencies in the world. It can also be described as private currency. All these operate with the support of sovereign guarantee. No country provides security. For example, a 500 rupee note is guaranteed by the Reserve Bank Governor. That is, even if it is a paper, RBI pays for it. But governments do not guarantee digital currencies like bitcoin.
However, the value of bitcoin-like cryptos is supported by complex programming. It cannot be changed individually by anyone, and includes many tests related to value. The easiest way to understand crypto is that it is a type of digital currency that can only be transferred from one person to another via the Internet.
As per the available reports, RBI wants to develop its own digital currency. Unlike a privately held cryptocurrency, a CBDC has the support of the Reserve Bank. This will be another event that will transform India. A part of the total rupee in the economy will be converted to a fully digital format. There will be no currency bill for backup. It will be in digital form. This issue is supported by the Central Bank, but it remains to be seen how far ahead our Reserve Bank has come in this regard. Issuing digital currency is not the same as printing currencies in the press. There is a need to strengthen cyber security. Otherwise the project will be in crisis.
However, RBI is not the first financial institution in the world to take such a step. Reports suggest that India is far behind in terms of cryptocurrency control. China has been working on this for years. It has the approval of the Central Bank of China and government approval. Digital currency is widely used by Chinese for transactions via smartphones. It is accepted in e-commerce portals, offline shops and other outlets.
However, there is a difference between CBDC and cryptocurrency. Because the latter has some basic characteristics. They can never imitate digital currencies. Crypto, by nature, operates on the basic principle of anonymity. That is, the seller and buyer details cannot be tracked. In the case of digital currency, the central bank will have full tracking just like normal currency. It is the digital currency used in China. This means that the transaction will be under the supervision of the government.
But cryptocurrency is decentralized. No one has the right over the currency. It is used by thousands of technical and business people around the world. And support for blockchain technology. In this case, digital currency is only the digital form of a centralized tender. For example, it is just that China is converting a portion of its yuan investment into digital format and transmitting it to the economy.
The fact is that cryptocurrency is not currently banned or legalized in India. A law may be brought to ban it soon. The Reserve Bank of India had banned banks from operating crypto exchanges, but in March 2020, the Supreme Court overturned the ban. Therefore technically crypto exchanges are active across the country.
English Summary: The Deputy Governor of Reserve Bank of India said that the Central Bank of India will reveal its CBDC’s decision soon.
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