The Indian Government is About to Release New RBI’s Cryptocurrency

The Indian Parliament’s winter session is midway, and the ministry of finance has countered the replies to the questions concerning the Central Bank Digital Currency or the CBDC. According to the ministry, it has received a request from the central bank to amend the Reserve Bank of India Act, 1934, to widen the ‘bank note’ scope to incorporate currency in digital form. The ministry added that the proposal would open significant benefits, including reduced dependency on cash and others.

Reportedly, the winter session of Parliament began on January 29, where the government has received many questions about the status of the cryptocurrency and the proposals of the RBI on launching the country’s Digital Cryptocurrency. The questions are about the quality of the proposals sent by the central bank, the details of the recommendations, and plans to introduce the digital currency.

In a written response, Pankaj Chaudhary, the State Minister in the Finance Ministry, stated that the RBI would introduce the Central Bank Digital Currency (CBDC). The government has received the request in the concern wherein the central bank has requested an amendment to the RBI Act, 1934 in place of extending the scope of “banknote” to incorporate digital assets. The RBI has been examining cases and working out a phased strategy for laying out the plans for the introduction of CBDC without much hassle.”

In reply to the question on introducing digital currency and the assessment conducted so far to counter the future implications, the minister assured the house that it would bring significant benefits.

"Introduction of CBDC will prove good for finding alternative such as dependency on cash, 

higher seigniorage due to lower transaction costs minimized settlement risk. The new move will possibly lead to more strong, efficient, trustworthy, regulated, and legalized payment options. However, associated risks need to be countered and evaluated against potential benefits.” added Chaudhary.

A source revealed that "unregulated cryptocurrencies might destabilize the macro-economy and create big speculative bubbles. Therefore, the move from the RBI seems appreciable.”

It is highly speculative that the RBI's Central Bank Digital Currency is likely to be included in the government's upcoming Bill on stabilizing cryptocurrencies in the ongoing winter session of the Parliament. According to the sources, the Bill came in light of the RBI’s examination on Macroeconomic stability. It is further believed that the government’s response shows that cryptocurrency will make a way out through the RBI in the country.

The Cryptocurrency and Regulation of Official Digital Currency Bill 2021, notified in a Lok Sabha bullet a few days ago, is likely to counter or prohibit all kinds of private cryptocurrency by introducing its very-own digital framework, backed by the country’s Reserve Bank. The new move highlights creating a solid framework for laying down the foundation of the cryptocurrency through a more vigilant and controlled chain of command.