Digital currency will come soon, RBI has progressed a lot about this
Digital currency will come soon
- Digital currency will be implemented on a pilot basis in the wholesale and retail sectors.
- RBI has also been looking into various aspects of CBDCs for quite some time now.
- FEMA and IT Act will also need amendment.
New Delhi : Reserve Bank of India (RBI) Deputy Governor T Ravi Shankar said on Thursday that the RBI is working on a strategy to implement its own digital currency in a phased manner and is in the process of introducing it to the wholesale and retail sectors on a pilot basis. Is. He said that the thinking about Central Bank Digital Currency (CBDC) has come a long way and many central banks of the world are working in this regard.
Shankar said CBDCs need to protect consumers from the “horrific level of volatility” seen in some digital currencies that do not receive any government guarantees. He said that the central banks of various countries are exploring the possibility of CBDC and some countries have presented such a view. Participating in the discussion during the online program of ‘Vidhi Center for Legal Policy’, he said that probably the idea of CBDC is close to implementation.
It is noteworthy that a high-level inter-ministerial committee constituted by the Ministry of Finance has examined the policy and legal framework and recommended introducing CBDC as a digital currency in the country. The Deputy Governor said that RBI, like other central banks, has been looking into various aspects of CBDCs for quite some time.
In general, some countries have implemented CBDCs for specific purposes. He said the RBI is working on a strategy to roll out its own digital currency in a phased manner and it can be implemented in a manner that does not affect the banking system and monetary policy. Shankar said that it can be implemented in the near future on a pilot basis in the wholesale and retail sectors.
The deputy governor said this would require a legal change as the existing provisions under the Reserve Bank of India Act have been made keeping the currency physical in mind. This would also result in the need for amendments to the Coinage Act, the Foreign Exchange Management Act (FEMA) and the Information Technology Act, he said. He said that these are some of the things that we are looking at internally.
Shankar also mentioned some of the risks associated with digital currencies. Like withdrawing money from the bank suddenly under pressure. He added that there are risks involved but they need to be carefully evaluated considering the potential benefits.
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