The Indian central bank has become the latest monetary regulator to examine the idea of launching a central bank digital currency (CBDC) and is currently exploring the ways of its optimization. The Reserve Bank of India (RBI) released a booklet named ‘Payment and Settlement Systems in India’ on Monday, revealing its current position on the digital version of fiats. This revelation came when the monetary regulators of several major economies are exploring the CBDC launch, as reported by Bloomberg Quint.
India explores the possibility of having a digital version of fiat currency.
Several countries are currently exploring CBDCs, with China being at the forefront with large-scale digital yuan pilot while European counterparts are also discussing the digital euro. “Private digital currencies (PDCs) / virtual currencies (VCs) / cryptocurrencies (CCs) have gained popularity in recent years,” the Indian regulator stated. “Nevertheless, the Reserve Bank of India is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalize it.”
The Reserve Bank of India does not approve of digital currencies.
The Reserve Bank of India made it clear that it is skeptical of digital currencies, especially because of the associated risks with them. A few years ago, the central bank had put a blanket ban on digital currencies, prohibiting banks from providing services to crypto consumers. But a Supreme court ruling overturned that decision last year. RBI has been studying the CBDC at various levels for a few years now. It formed an inter-departmental group in 2018 to study and guide the ‘desirability and feasibility’ of the CBDC. However, the RBI governor pointed out the technological shortcomings and said it was “too early” to launch such a fiat alternative in 2019 end.