Reetu | Apr 28, 2022 |
Reserve Bank of India will launch digital currency in a phased manner; first wholesale customers will get this facility on pilot basis
The preparations for the launch of the digital currency announced in the Union Budget 2022-23 are almost complete and will be implemented after getting the nod from the central government. It will probably be implemented in a phased manner in the last quarter of the current financial year. RBI plans to first launch digital currency for wholesale customers on a pilot basis. After that it will be offered to retail customers on a pilot basis.
After two phases, finally the general public will be allowed to transact in or invest in digital currency corporatized by RBI or its other commercial use.
Finance Minister Nirmala Sitharaman spoke about the Central Bank Digital Currency (CBDC) in India at an event in the US. Sitharaman made it clear that the intention of the government to do financial inclusion through CBDC is not for any purpose but mainly for commercial purpose. RBI is looking into the fact whether it can be used for commercial purposes.
In this regard, RBI officials say that the current system of digital payments in the country of CBDC will be very different from UPI. The biggest reason for divestment would be that the CBDC would be guaranteed by the RBI. While UPI has been developed by another agency NPCI. Also, UPI is not universally recognized internationally. On the other hand, it will be much easier between countries having digital currency system to recognize each other’s currency.
Like RBI, many other countries are preparing to launch digital currency on behalf of central banks too. It is believed that the system of financial payment between the countries which will have digital currency will be more easy and affordable. Many barriers to payments on a global scale will be removed. Exchange rate fluctuations will also be protected to some extent.
Officials who are preparing for the launch of CBDC say that the general public will have another option to pay in the form of digital currency. An advantage to the central bank would be that its cost on money management would be lower. At present, a part of the currency in the system has to be kept in liquid form. This makes it cost more.
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