Government clear on plans to issue cryptocurrency

In a written reply, Minister of State (MoS) for Finance Pankaj Choudhary said, “RBI does not issue cryptocurrencies. Traditional paper currency is a legal tender and is issued by RBI as per the provisions of the RBI Act, 1994. A digital of The version of traditional paper currency is called a CBDC.”

A Deloitte report recently stated that the proposed CBDC to be issued by the Reserve Bank will play a vital role in improving transaction speed and reducing the cost of cash.

The report states that CBDCs can enhance the efficiency and effectiveness of jurisdictions’ payment systems by ensuring their users have access to secure digital money. CBDCs would provide users with a sovereign option compared to other less secure digital instruments, which could lead to less reliable payments, a relatively volatile store of value and potentially worsen monetary and financial stability.

RBI is planning to come up with a central bank backed digital currency using blockchain technology in 2022-23.

A CBDC is a digital or virtual currency, but it cannot be compared to private virtual currencies or cryptocurrencies, which have grown over the past decade. Private virtual currencies do not represent an individual’s debts or liabilities as there is no issuer.

As a form of financial services innovation, CBDCs could play a key role in shaping the ‘transfer of value of the future’, the report said, adding that most central banks around the world are now planning to launch their own national digital currencies. are in various stages of evaluation.

Monish Shah, Partner, Deloitte India, said, “CBDCs provide a more flexible, innovative and competitive payment system for households, businesses and economies, due to their inherent potential to transform the way value is transferred.