- The paper provides a concise overview of the rationale for the launch of CBDC.
- Since its inception, the RBI has been wary of public blockchains and cryptocurrencies.
In a 51-page memo released on October 7, the Reserve Bank of India (RBI) detailed the planned characteristics and rationale for the central bank digital currency (CBDC) it is creating.
The Reserve Bank of India (RBI) is working to educate the public about central bank digital currencies (CBDCs), which are currently under development by a number of different central banks around the world, and to define the RBI’s goals, options, and the potential benefits and drawbacks of introducing a digital rupee in India.
The paper provides a concise overview of the rationale for the launch of an Indian CBDC, emphasizing the importance of trust, security, liquidity, and finality/integrity in the settlement as hallmarks of a truly sovereign digital currency.
Authority to Control Monetary System
Issuers in India are interested in CBDCs primarily because they will help cut down on the country’s overall cash management expenses. In addition to more robust, efficient, and creative payment infrastructure, the RBI also highlights increased financial inclusion.
The promise of an offline function for the CBDC, which would be useful in places without a steady power supply or cell network connection, further emphasizes the CBDC’s potential to improve cross-border payments and settlements.
Since its inception, the RBI has been wary of public blockchains and cryptocurrencies; this paper reaffirms the central bank’s position that these products provide an undue risk to Indian consumers owing to their volatile markets.
India’s central bank, the RBI, has voiced its worry that the continuous growth of cryptocurrencies poses a danger to financial stability in the country since it would reduce the RBI’s authority to control monetary policy and the monetary system.