The central bank of India is evaluating and considering a state-backed digital rupee. The Reserve Bank of India (RBI) reviewing the need and endurance of central bank digital currency (CBDC). The RBI has shown interest to launch a digital rupee.
On January 25th, 2021, RBI launched a document entitled “Payment and Settlement System of India”.
The document states :
“Private digital currencies (PDCs) / virtual currencies (VCs) / cryptocurrencies (CCs) have gained popularity in recent years. In India, the regulators and governments have been skeptical about these currencies and are apprehensive about the associated risks.”
However, the document further says that,
“RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalize it.”
In 2018, the RBI has entirely prohibited the regional banks from providing the services to cryptocurrency exchanges. However, in early 2020 the rule was sooner reverse by the Supreme Court of India.
Is India following the footprints of the Chinese digital Yuan program?
India enlists in the nations that have shown a significant interest in their own CBDC.
Since 2017 China has been working on the digital yuan project, the scheduled date of digital yuan launching was 2020. However, due to the COVID-19 pandemic, the project has been delayed as reported by Asia Times. Currently, the Chinese digital Yuan project is in its early experimental phases. Similarly, the Digital Euro project is in its analysis and discussion phase. Financial Policymakers are considering, the CBDCs and strong global regulation to control the rising cryptocurrency and decentralized finance system.