Union Finance Minister Nirmala Sitharaman on Tuesday announced the launch of India's own digital currency by the RBI next financial year (2022-23) that will be based on Blockchain technology.

With this, India will join certain nations that have their own central bank digital money (CBDC) that alludes to the virtual type of fiat cash.

"Digital rupee to be issued using Blockchain and other technologies by the RBI starting 2022-23. This will give a big boost to the economy," said Sitharaman in her Union Budget 2022-23 discourse in Parliament.

While the much-expected Cryptocurrency Bill is yet to see the light of the day, the Reserve Bank of India (RBI) has already been deliberating upon various aspects relating to the central bank digital money and private crypto monetary forms.

The central bank has been chipping away at modalities for central bank digital money. In any case, it has communicated reservations on private cryptocurrencies.

RBI Governor Shaktikanta Das has already said that cryptocurrencies are a matter of distress from the macro-economic and financial stability point of view.

CBDCs are by and by for the most part in the hypothetical stage, with some in verification of-idea programs.

Notwithstanding, more than 80% of central banks are taking a gander at digital currencies.

It is likewise expected that one will want to do miniature exchanges, in this manner, taking the burden off customary financial organizations. However the subtleties have not been uncovered at this point, it is normal that CBDC will make cross-boundary cash move less complex with fewer charges.

Earlier, the Indian government was slated to present new regulations for a cryptocurrency throughout the Winter Session of Parliament, which started on November 29.

The meeting finished without seeing 'The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021'.

India's declaration comes only days before the Beijing Winter Olympics, when China is booked to exhibit its CBDC, the computerized yuan, to the worldwide crowd.

“The issuance of a central bank digital currency (CBDC) by the RBI will enable an efficient transfer of digital rupee much like UPI, IMPS, or NEFT. This can make transfers cheaper and enable 24x7 serviceability.  Overall, we believe that the ecosystem along with its businesses and investors are primed for growth in the upcoming future. The Government, we believe, has already laid the foundation for future thriving and sustaining industry,” Vikram Subburaj, CEO, Giottus Crypto Exchange stated. 

Joyashree Dey

CBW - External Analyst

INDIA