Recently, the Reserve Bank of India (RBI) has announced that it will launch India’s central bank digital currency in phases to allow a smooth transition to take place. T. Rabi Sankar, RBI deputy governor, announced this planned approach at a media conference.
He also said that its upcoming digital currency is the result of the government’s years of study about the benefits and downsides of a digital currency.
“RBI is currently working towards a phased implementation strategy and examining use cases which could be implemented with little or no disruptions to India’s banking or monetary systems,” Sankar said.
The same as fiat currency
The central bank has also said that the upcoming CDBC is the same as India’s fiat currency and is exchangeable one-to-one with India’s money. The only difference that the CDBC would have is its digital form.
It also added that India’s CDBC would be general-purpose digital money, unlike in other countries where their CBDC is restricted on either wholesale or retail segments. But Sankar said that wholesale and retail applications are something that the central bank is also considering.
Benefits of CBDC
In the media conference, Sankar also mentioned the clear benefits of India’s CDBC, which includes huge savings from money printing and bringing down citizens’ dependency on cash.
One benefit he also highlighted is that CBDC can also reduce the time zone difference in foreign exchange transactions, which could facilitate a more convenient international settlement system.
Sankar said that one of the major reasons why India decided to create its own CBDC is that its central bank’s definition of digital currency is not in line with cryptocurrencies’ nature and capabilities.
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