The Reserve Bank of India declared Monday that it is exploring the possibility of creating a digital version of the rupee.
The creation of a CBDC could lead to the best of both worlds – the security and convenience of cryptocurrencies and the regulated money circulation of the traditional banking system.
“This has made central banks around the world examine whether they could leverage on technology and issue fiat money in digital form,” the RBI said.
Easy Steps
Up until recently, RBI has had a suspicious view of virtual currencies, citing, of course, their use in money laundering and drug trafficking.
In April 2018, for example, RBI banned crypto, which resulted in great damage to several investors who, inspired by the global market, started investing in crypto.
Still, as a result of increased demand for crypto regulations, the Supreme Court of India struck down RBI’s ban.
“But with a few countries (such as Sweden, Russia, Iran, China, Japan, and the USA) already testing their CBDCs, the RBI too has now realized that there is a need to explore the feasibility of digital money,” Dinkar Kalra, a fintech lawyer, and a solicitor at the Courts of England and Wales declared.
Working on It
The RBI commented that the change from a cash-based economy to a digital one is a “work in progress,” one that may take a long time to carry on.
“Considering the diversity of users in the payment ecosystem, there is still a long road to be traveled, especially across geographies and societal cross-sections like senior citizens and migrant workers,” the RBI declared.
This means that, as of now, it is not clear whether RBI would mandate a CBDC holder to keep an account with itself or whether it would ask the banks to operate the CBDC accounts.