During the Union Budget 2022 session, Indian Finance Minister Nirmala Sitharaman today announced the new Digital Rupee, which will be based on Blockchain technology. The Digital Rupee is due to be launched during fiscal year 2022-2023 and will be issued by the Reserve Bank of India (RBI). Here are the details you need to know.
India’s Own Digital Currency Introduced
The digital rupee or the Central Bank Digital Currency (CBDC) is a next step in the Digital India initiative and aims to: Make the currency management system more streamlined and cheaper.
During the 2022 Union Budget session, Sitharaman said:Digital currencies will also lead to a more efficient and cheaper currency management system. Hence, it is proposed to introduce digital rupee using blockchain and other technology to be issued by the Reserve Bank of India from 2022 and 2023.“
This comes after RBI, in October 2021, received approval to amendment to the Reserve Bank of India Act, 1934, which will amend the definition of a “banknote” to include the possibility that it is in digital form.
The CBDC is said to have its own benefits and will reduce people’s reliance on cash, reduce settlement risks and also help the government get high seigniorage (profit made by a government by spending currency) on it due to lower transaction costs . In addition, a blockchain-based digital rupee can also be a “Lake robust, efficient, trusted, regulated and legal tender based payment option,‘, as suggested by Pankaj Chaudhary, the state minister of the Ministry of Finance.
The security and other issues cannot be neglected completely, however, and these will be carefully examined before the digital rupee is officially rolled out later this year or early next year.
This announcement comes amid the recent rumors, which suggested that the Indian government would soon adopt a new crypto account for the regulation of cryptocurrency in india. It was supposed to be tabled during the winter session of the Parliament, but that has not happened. The crypto law is said to ban private cryptocurrencies, introduce an RBI-led regulatory body, and more. It remains to be seen when the bill will take shape.
What do you think of India’s own blockchain-based digital rupee? Let us know your thoughts in the comments below!