Dharamshala, 5th February: The RBI will launch the Digital Rupee in 2022-23, according to Finance Minister Nirmala Sitharaman, marking the first official pronouncement from the Union government on the much-anticipated digital currency’s introduction. The implementation of CBDC, according to FM, will further improve India’s standing as a digital economy. The central bank’s introduction of a digital currency will result in lower currency management costs. Starting in FY 2022-23, the digital rupee issued by the RBI will be based on blockchain technology, according to the FM.
PM Modi said on Wednesday that the digital currency will strengthen the digital economy in the coming year and that the RBI-backed CBDC will be a digital avatar of India’s fiat currency that will be overseen and monitored by the central bank. The PM implied that the RBI’s digital money, which is a modernized version of the physical currency, will be legal tender. Modi stated that consumers will be able to easily transfer digital currency to physical currency and vice versa, bolstering India’s digital economy and environment. With the establishment of CBDC, digital payments and online fund transfers will be safer, more secure, and risk-free, according to Modi. He also stated that the worldwide digital payment system will be streamlined as a result of this.
To avoid any disruptions, the Centre informed the Lok Sabha last year that the Reserve Bank of India (RBI) is developing a phased implementation strategy for the introduction of Central Bank Digital Currency (CBDC) by studying use cases. It went on to say that in October, the RBI proposed amending the Reserve Bank of India Act, 1934 to broaden the definition of “banknote” to encompass cash in digital form.
“The purpose of creating a digital currency is to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs and reduced settlement risk,” In its response, the Ministry of Finance notified the Lok Sabha.
The CBDC is a digital counterpart of fiat currency that is regulated by the central bank and maybe exchanged via blockchain-based wallets. CBDCs are separate from decentralized virtual currencies and crypto assets, which are not issued by the government and do not have the status of “legal cash.”