Finance Minister Nirmala Sitharaman in her budget speech had mentioned launching a central bank-backed ‘digital rupee’ soon
India will soon have its official digital currency and if reports are to be believed, this will happen in early 2023. While it will be similar to many of the available electronic wallets, the Indian digital currency will be a sovereign-backed facility, a top government source was quoted saying to news agency PTI. Finance Minister Nirmala Sitharaman in her budget speech had mentioned launching a central bank-backed ‘digital rupee’ soon.
According to a top government source who was quoted by PTI, said that the digital currency issued by the Reserve Bank of India (RBI) would be numbered in units, just like every fiat currency has an unique number. “The units issued in digital rupee would be included in the currency in circulation. It would not be very different from fiat currency. It would be more like an electronic form of fiat currency, so in a sense it would be a government-mandated electronic wallet,” the official said.
The RBI has reportedly said that the digital rupee would be ready by the end of next financial year. The digital rupee blockchain would be able to trace all transactions, unlike the current system of mobile wallet offered by private companies.
The exact regulation governing this Central Bank Digital Currency (CBDC) is yet to be finalised. CBDC will be a digital or virtual currency but it will not be comparable to the private virtual currencies or cryptocurrency
The official also said that using a electronic wallet offered by private companies means that money is transferred to the private company that holds the money on his/her behalf and pays to a merchant when there is any transaction. “In the case of a digital rupee instead of holding a note you will be holding a digital currency in your phone and it would be with the central bank and from there it would be transferred to any merchant. It is fully backed by the sovereign,” the official said.
If the money is transferred to the e-wallet of a private company, then the credit risk of that company is also attached to the money besides charges levied by such companies. Instead of carrying this wallet, one will carry money on the phone.
Finance Minister Nirmala Sitharaman had said In the 2022-23 Budget, that introduction of Central Bank Digital Currency (CBDC) would provide a boost to the digital economy. “Digital currency will also lead to a more efficient and cheaper currency management system. It is, therefore, proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23,” the minister had said.
The exact regulation governing this Central Bank Digital Currency (CBDC) is yet to be finalised. CBDC will be a digital or virtual currency but it will not be comparable to the private virtual currencies or cryptocurrency.
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