In the annual report, the RBI said it has been exploring the pros and cons of introduction of CBDC and added that the appropriate design elements of CBDCs that could be implemented with little, or no disruption are under examination.
Mumbai: The Reserve Bank of India (RBI) on Friday said that it is proposing to adopt a graded approach for launching central bank digital currency (CBDC) in the country to ensure conformity objectives of monetary policy, financial stability and efficient operations of currency and payment system
“The Reserve Bank of India proposes to adopt a graded approach to introduction of CBDC, going step by step through stages of Proof of Concept 12, pilots and the launch,” the central bank said in its annual report.
The RBI also said in the annual report that it has been exploring the pros and cons of introduction of CBDC in India and the appropriate design elements of CBDCs that could be implemented with little, or no disruption are under examination.
“The Reserve Bank is engaged in the introduction of a central bank digital currency (CBDC) in India. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems,” RBI added.
The RBI said the design of the Central Bank Digital Currency needed to be in line with the objectives of its monetary policy, financial stability and efficient operations of currency and payment systems.
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The statement from the RBI came months after it said it was in a position to start off with testing and running pilot projects of the CBDC.
In Union Budget 2022-23, Finance Minister Nirmala Sitharaman had announced that the RBI will introduce the CBDS as India’s official digital rupee in 2022-23. The new digital currency is likely to be tethered to the fiat version of the Indian rupee, and will use blockchain and related technologies to operate.
“The introduction of CBDC has been announced in the Union Budget 2022-23 and an appropriate amendment to the RBI Act, 1934 has been included in the Finance Bill, 2022. The Finance Bill, 2022 has been enacted, providing a legal framework for the launch of CBDC,” the RBI further said.
It must be noted that digital currency is the legal tender issued by a central bank in a digital form. “CBDC is a digital or virtual currency but it is not comparable to the private virtual currencies that have mushroomed over the last decade,” the RBI added.
RBI Sets up Innovation Hub
In an effort to foster innovation in a sustainable manner and through an institutional set-up, the Reserve Bank Innovation Hub (RBIH) has been set-up as a wholly owned subsidiary of the Reserve Bank, the RBI said, adding that the Innovation Hub has an independent Board with eminent members from industry and academia and has its headquarters in Bengaluru.
