The reserve bank of India (RBI) would also include specific use cases in the country’s digital economy. The announcement comes when the global crypto market is on a decline.
CBDC over private crypto?
The RBI wrote in its concept note regarding the central bank digital currency that the e-Rupee would complement and not replace private cryptocurrencies. But, the e-Rupee would help simplify payment systems, ensure anonymity and reduce money laundering. The note adds that a critical design decision for any CBDC would be the level of anonymity, and this has been several discussions regarding this issue.
During its Union Budget speech, Indian authorities announced the CBDC launch for the 2022-23 fiscal year. Nevertheless, the authorities’ approach towards crypto use by Indians hasn’t been encouraging. After declaring the launch of the CBDC, India’s finance minister added that it is now compulsory for crypto traders to pay 30% of their profits as tax.
Deputy governor of the RBI, Rabi Sankar, also mentioned that the launch of CBDC could mean the end of private digital currencies in India. He said the authorities wouldn’t allow all kinds of crypto because they are built with blockchain technology.
Meanwhile, Rajapgopal Menon, crypto exchange, WazirX’s vice president, said the RBI is capitalizing on India’s love for crypto by saying that CBDCs will be more beneficial, have better features, and with fewer risks than private cryptos.
A huge talking point
A central bank-issued digital currency has been the subject of hot debate among many central banks worldwide. The RBI maintains that it will continually update the public on the essential features of the e-Rupee now and then. Per multiple reports, over 60 central banks globally are interested in launching a national digital currency.
Some of these apex banks have already started a pilot program for their CBDCs, either for the broader consumer market or a section of the market. While some countries have launched a framework for their CBDC, many are still in the research and testing phase.