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Cryptocurrency debate: RBI in for basic model of digital currency first

The report added that certain crucial design elements need to be examined before it is launched.

Published: 29th December 2021 03:52 AM  |   Last Updated: 29th December 2021 10:02 AM   |  A+A-

Cryptocurrency, Bitcoin

For representational purposes. (File | Reuters)

By Express News Service

NEW DELHI:  As the central bank is set to launch its own digital currency, it is planning to adopt basic model initially as there are many design elements which it is yet to decide upon, it said in a report titled ‘Trend and Progress of Banking in India 2020-21’.

“Given its dynamic impact on macroeconomic policy making, it is necessary to adopt basic models initially, and test comprehensively so that they have minimal impact on monetary policy and the banking system,” the report released on Tuesday said.

The report added that certain crucial design elements need to be examined before it is launched.

“Certain crucial questions about design elements of CBDC need to be navigated before its introduction, e.g., whether the CBDC would be general purpose and available for retail use , or would it be for wholesale use. Furthermore, in a country like India, the decision about distribution architecture, i.e., whether CBDC would be issued directly by the central bank or through commercial banks, needs to be carefully weighed,” the report added.

The RBI also highlighted that banks need to improve corporate governance. “Banks would need to strengthen their corporate governance practices and risk management strategies to build resilience in an increasingly dynamic and uncertain economic environment,” the RBI said in its latest report on Indian banking.



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