The Reserve Bank of India appears to have also joined the state-backed digital currency race (akin to a state-controlled Bitcoin for specific use cases), having set up its own committee to study the possibility of such a digital currency, according to the bank’s annual report for 2017-2018 published on Wednesday.
“In India, an inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency,” said the Reserve Bank of India in its annual report.
Such a digital currency, being experimented by various central banks around the world, are most likely to be used for interbank settlements, mainly to cut the cost of fiat-currency transactions.
The publication of the annual report came on the heels of a news report that cited unnamed RBI officials as saying that the bank has formed a new research unit within the central bank to research new technologies such as blockchain, the technology behind cryptocurrencies, and artificial intelligence.
This new unit will research and help possibly draft rules and supervise new emerging technologies in the future, the newspaper The Economic Times quoted two people familiar with the central bank’s plans as saying.
Indian central bank has so far been skeptical of digital currencies such as Bitcoin and has warned holders and traders of virtual currencies for various financial and legal risks.
It has banned banks from dealing with Bitcoin exchanges even though the Indian Ministry of Finance has yet to make a definite announcement as to how it views cryptocurrencies. The MOF has set up a new committee to study a yet-to-be-announced regulatory framework for Bitcoin and digital assets in India.