In the Corona era, the level of investment in cryptocurrencies forced the Reserve Bank of India to accelerate its digital currency plans. According to the latest news, the Reserve Bank of India has tightened its digital currency action plan, and its pilot test will begin soon. So far, the Reserve Bank of India has not granted legal recognition of private cryptocurrencies. But the Supreme Court has also lifted the trading ban.
The introduction of cryptocurrencies has increased rapidly around the world. Because of this, central banks around the world have begun to study their CBDC / Central Bank Digital Currency. According to a report published by the Economic Times, 86% of central banks around the world are currently studying the CBDC capabilities, and 14% of central banks have initiated pilot projects.
The central bank considered many aspects
T. Ravi Shankar, Deputy Governor of the Reserve Bank of India, said that we are gradually moving in this direction. Pilot tests will also be conducted in the short term to make use of relevant information. He said that the Reserve Bank is analyzing whether the digital currency is used for retail or wholesale, whether the technology is centralized or distributed, issued by the Reserve Bank of India itself or issued by various banks. Necessary changes to FEMA, IT Act, Coin Act, and RBI Act must also be done to prevent violations including money laundering. He said that with the advent of it, the reliance on cash will decrease. The cost of printing currency will be similar.
What will RBI’s digital currency look like?
Regarding the emergence of the Reserve Bank CBDC, Deputy Governor Shankar stated that it will continue to be legally recognized by the Reserve Bank of India. This form of currency will be digital. Its cost will not change. For example, a 10 rupee banknote and a 10 rupee digital currency have the same value. It can be exchanged without interruption. In addition to the Reserve Bank of India, central banks in countries such as China, the United Kingdom, and Russia are currently considering the introduction of this currency.