RBI open to digital currency, examining the need to introduce CBDC
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The RBI's statement comes against the backdrop of private digital currencies, virtual currencies, and cryptocurrencies gaining popularity in recent years. In India, the regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks.
“Nevertheless, the RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalise it,” the RBI said, releasing a booklet of payment systems in India.
CBDC is a legal tender and a central bank liability in digital form denominated in a sovereign currency and appearing on the central bank's balance sheet. It is in the form of electronic currency which can be converted or exchanged at par with similarly denominated cash and traditional central bank deposits.
“Innovations are changing the payments space rapidly. This has made central banks around the world to examine whether they could leverage on technology and issue fiat money in digital form,” the RBI said.
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