26 July, 2021
RBI has finally announced the introduction of India’s CBDC on July 22nd, which is expected to be smoothly instigated in a phased manner. A CBDC is a legal tender issued by a central bank in a digital form. In effect, it is just a digital version of the fiat currency, which in India’s case is the rupee. So, it’s not the same as other private virtual currencies like bitcoin or ether, according to a report by Quartz India.
While the announcement about CBDC does not particularly mean that the RBI has changed its stance about cryptocurrencies of all kinds, it might be an added advantage to the entire ecosystem. Most major central banks have followed China which has it’s CBDC running in several cities. The US Federal Reserve and the Bank of England are also looking into the possibilities of their own digital currencies. In fact, around 86% of global central banks were actively researching the potential for central bank digital currency, while 60% were experimenting with the technology and 14% were launching pilot projects, according to a survey by the Bank for International Settlements (pdf).
Reserve Bank of India’s (RBI) deputy governor T Rabi Sankar also added, “CBDCs are desirable not just for the benefits they create in payments systems, but also might be necessary to protect the general public in an environment of volatile private virtual currencies”.
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