- Reserve Bank proposes to adopt a graded approach to the introduction of CBDC
- CBDC will conform to the existing objectives of monetary policy, financial stability, etc.
- “Digital currency will lead to a more efficient and cheaper currency management system,” says the finance minister.
RBI said in an annual report it released earlier during the day it was looking at the pros and cons of the introduction of CBDC in India. Therefore, it ought to take gradual steps through stages of proof of concept, and pilots before the official launch.
The proposal also aimed to ensure that the CBDC conforms with the existing objectives of monetary policy and financial stability.
RBI report read:
The Reserve Bank is engaged in the introduction of a central bank digital currency (CBDC) in India. The design of CBDC needs to conform with the stated objectives of monetary policy, financial stability, and efficient operations of currency and payment systems.
RBI added that it plans to adopt a “graded approach to the introduction of CBDC, going step by step through stages of Proof of Concept, pilots, and the launch.”
CBDC is the much-talked-about alternative to cryptocurrency. It will be legal tender like paper currency with all the characteristics of the existing fiat currency.
On April 17, 2022, Nirmala Sitharaman, the Finance Minister of India, said in her budget speech that “digital currency will lead to a more efficient and cheaper currency management system.”
Subhash Chandra Garg, a former finance secretary, also said: “Cryptos are raising concerns on two fronts—monetary stability and financial stability. The RBI is more concerned about the monetary stability part.”