Just like China, India’s central bank is working toward introducing its own digital currency which will put for a final design after it conducted large-scale pilot projects.
The country’s Reserve Bank is said to be exploring the option of implementing an account-based central bank digital currency or CBDC for the wholesale segment and token-based currency for the retail sector.
The digital currency will be known simply as the e-Rupee and will provide an additional option to all available forms of money.
Another country that is doing something like this is China which is pushing its own digital versions of digital currency as well while rebelling against crypto – for now.
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India’s Finance Minister Nirmala Sitharaman said the RBI would launch the digital currency this year.
“As there are multiple compelling motivations for the introduction of CBDCs, the RBI is currently engaged in working towards a phased implementation strategy, going step by step through various stages of pilots followed by the final launch,” the paper said.
The RBI will soon kick off a limited pilot launch for the e-rupee.
The “CBDC holds a lot of promises by way of ensuring transparency, and low cost of operation among other benefits and the potential to expand the existing payment systems to address the needs of a wider category of users,” the RBI said.
The RBI also acknowledged that privacy and data protection would be of utmost priority when it comes to designing CBDCs.
“Ensuring anonymity for a digital currency particularly represents a challenge, as all digital transactions leave a trail. Clearly, the degree of anonymity would be a key design decision for any CBDC and there has been significant debate on this issue,” the note said.
“In a rather roundabout way, the RBI acknowledges India’s love for crypto by saying that CBDCs will provide the public with the benefits and features of crypto without the associated risks,” said Rajagopal Menon, vice-president at a crypto exchange, WazirX.
India isn’t exactly cool with crypto assets just like China. The RBI in 2018 had cut crypto start-ups from the country’s payment network and earlier this year, the country announced a new crypto tax regime under which 1% transactional tax has decimated volumes on crypto exchanges were down by over 90% since the beginning of the year.