NEW DELHI: Just days after the union budget asserted that India would look at its digital rupee, the Reserve Bank of India (RBI)announced on Friday that it was working on its digital currency and results were expected “very soon.”
“We had a committee that is still on the drawing board. In fact, an internal committee is taking a close look to decide on the model of the central bank digital currency and you will hear from the Reserve Bank very soon in the matter,” said Deputy Governor BP Kanungo.
A digital currency issued by the central bank would create a digital version of India’s fiat currency: the rupee, officials said. Earlier on Tuesday, the Minister of State for Finance Anurag Singh Thakur had said the government will explore the use of blockchain technology for digital economy, in response to a question raised in the upper house.“There are many advantages of having a digital currency - managing cash on a national scale, implementing monetary policy more easily and catching tax cheats,” said Amit Bannerjee, a merchant banker specialising in East Asian funds.
However, increased control by the government on cash flows is considered the downside. Analysts
believe that China which is currently holding its second round of field experiments with a digital Yuan has gone in for its digital currency partly to take on the dominance of the US dollar and partly to have stricter control over how its citizens earn and use their money.
In the budget session of 17th Lok Sabha that commenced last month, the government had listed a bill for creating the legislative framework for the official digital currency and for banning all private cryptocurrencies in India.
A summary of the bill said it seeks “to create a facilitative framework for creation of the digital currency to be issued by the Reserve Bank of India.” Officials said a survey of central banks conducted by the Bank for International Settlements had revealed that four out every five of the responding central banks have started projects to explore use of digital currencies, including Canada, USA and Singapore.