New Delhi: The Reserve Bank of India (RBI) recently announced that its proposed central bank digital currency (CBDC) would act as a viable alternative to cryptocurrencies in the country. The move comes amidst growing concerns about the risks associated with cryptocurrencies and their impact on the economy.
According to T. Rabi Sankar, the Deputy Governor of RBI, the central bank’s digital currency will be a legal tender and a sovereign digital currency issued by the RBI. He further stated that the CBDC would be backed by the Indian government and will be a safe and secure way to transact digital assets.
Sankar said that the RBI has been working on the concept of CBDC for some time now and is currently in the process of conducting pilots to test its feasibility. He added that the CBDC will differ from cryptocurrencies like Bitcoin and Ethereum, which are decentralized digital assets not backed by any government or financial institution.
The RBI’s move to launch its digital currency comes at a time when cryptocurrencies are gaining popularity in India. The country has seen a surge in the adoption of cryptocurrencies over the past few years, with many young investors entering the market.
However, the Indian government has been skeptical about using cryptocurrencies and has expressed concerns about their economic impact. In 2018, the RBI banned banks from dealing with cryptocurrencies, which the Supreme Court later overturned in 2020.
Sankar’s comments suggest that the RBI is taking a cautious approach to adopting digital currencies and is looking to provide a safe and secure alternative to cryptocurrencies.
The RBI’s CBDC is expected to have several advantages over cryptocurrencies. For one, it will be backed by the Indian government, making it a more stable and reliable asset. Additionally, it will be a legal tender, which means it can be used for transactions and payments in the country.
The launch of the RBI’s CBDC is expected to significantly impact the Indian economy. It will provide a new way of transacting digital assets, which could lead to increased adoption of digital payments in the country. It could also help reduce the risk associated with cryptocurrencies and provide a safe and secure way of transacting digital assets.
In conclusion, the RBI’s move to launch its digital currency is a significant development in the Indian economy. It shows that the central bank is taking a cautious approach to the adoption of digital currencies and is looking to provide a safe and secure alternative to cryptocurrencies. The launch of the CBDC is expected to impact the economy positively and could lead to increased adoption of digital payments in the country.
