Key Takeaways
- India Central Bank Plans pilot test for digital currency
- Digital currency will be launched in different phases
- India joins Nigeria in the race to launch a national digital currency
Rabi Sankar, the Reserve Bank of India (RBI), revealed this development in a statement during a conference on July 23.
According to the statement, the RBI had completed an initial proposal and is contemplating introducing the digital rupee in different phases. The Bank chief also noted that this method would enable the government to pass necessary legal and fiscal changes required for the digital currency to thrive in the nation.
Sankar concluded that the digital currency would reduce the current dependence on cash and protect Indians from the volatile nature of cryptocurrencies.
India’s apex bank had earlier published a report in March that covered the potential benefits and problems of issuing a national digital currency. At the time, it was seen as a major development for the regulator, which has shown previous opposition to digital currencies.
The RBI had banned cryptocurrencies in 2018, with banks preventing exchanges from processing transactions within the country. However, this was overturned by the Supreme court in 2020.
Despite this development, there remains an intent from the Modi-led government to ban cryptocurrencies. In addition, a controversial crypto bill was proposed earlier in the year that received backlash from the local crypto community.
The recent interest in developing a central bank digital currency (CBDC) could be signs of changes within the Indian financial system. However, India is not the only country contemplating creating a digital currency, as Nigeria is also working on a national currency.
The African giant had banned cryptocurrency transactions in February but appeared to be working towards a legal and regulatory framework that includes a national digital currency.
It remains to be seen whether the launch of a digital currency would change the current sentiment against crypto-assets like Bitcoin and Ethereum.
What do you think about India’s stance on cryptocurrencies?
