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The Reserve Bank of India (RBI), the central bank of India, stated that it must first adopt a basic central bank digital currency (CBDC) model and conduct a comprehensive test to minimize the impact on the country’s monetary policy and banking system. The top Indian bank saw several benefits from the introduction of a digital rupee, including the “potential to improve the efficiency of cross-border payments.”
RBI outlines the benefits of issuing digital currencies and how to start a CBDC with minimal impact
The Reserve Bank of India (RBI) on Tuesday released the “Report on Trends and Progress in the Indian Banking Industry 2020-21”. Part of this 248-page report is about central bank digital currencies.
“In terms of its basic form, the Central Bank Digital Currency (CBDC) provides a safe, robust and convenient alternative to physical cash,” the Bank of India described, adding, “According to various design options, it can also use complex Form a financial instrument.” The Reserve Bank of India continued:
Compared with existing currency forms, it can bring benefits to users in terms of liquidity, scalability, acceptance, convenience of anonymous transactions, and faster settlement.
The Central Bank of India pointed out that before introducing central bank digital currency, it must first answer “key questions” about the central bank’s digital currency design. For example, one question is “is the CBDC universal and can be used for retail use (CBDC-R), or for wholesale use (CBDC-W).”
The Reserve Bank of India emphasized that “in a country like India, the decision on the issuance structure, that is, whether the CBDC is issued directly by the central bank or through commercial banks, needs to be carefully weighed.”
Noting that measuring the scale of issuance and distribution will help determine the “appropriate basic technology best suited to handle this type of operation,” the top banks detailed:
In view of its dynamic impact on the formulation of macroeconomic policies, it is necessary to initially adopt the basic model and conduct comprehensive tests to minimize its impact on monetary policy and the banking system.
When discussing the role of central bank digital currencies in cross-border transactions, the Reserve Bank of India stated: “The introduction of CBDC may improve the efficiency of cross-border payments and may provide an alternative to correspondent banks.” The report details:
India’s advancements in payment systems will provide citizens and financial institutions with a useful backbone for providing state-of-the-art CBDC.
At the same time, Shaktikanta Das, Governor of the Reserve Bank of India, repeatedly stated that the central bank has Serious and major problems About cryptocurrency.At the recent central board meeting, the Reserve Bank of India called on the Indian government to implement Completely banned Regarding cryptocurrencies, it is stated that some of the bans do not work.Nevertheless, according to reports, the government is planning adjust Encrypted assets with the Securities and Exchange Commission of India (SEBI) as the main regulatory agency.
What do you think of the Reserve Bank of India’s comments on CBDC? Please let us know in the comments section below.
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