In Brief:
- RBI may launch CBDC in the first quarter of FY23.
- The initiative is aimed to modernize the financial system and inclusivity.
- According to RBI’s CGM, There are several issues that need to be considered and the CBDC implementation should not be hurried.
The Reserve Bank of India (RBI) may launch the Central Bank Digital Currency (CBDC) pilot in the first quarter of the next fiscal year. Previously, a few central bank senior officials had commented on this initiative saying that CBDC is in an advanced stage and a soft launch could happen by December.
However, there is no confirmation from the regulator on a firm timeline. Vasudevan, the RBI Chief General Manager (CGM) has also come forward to speak up on this pilot CBDC stating that there is no need to hurry in the launching process. According to him, there are various issues regarding CBDC that are being looked into. Based on how it is executed, its usage can be determined.
At a banking event on Wednesday, P. Vasudevan, chief general manager at the RBI’s Department of Payment and Settlement, said that there are various aspects that need to be considered before implementing pilot digital currency and he also mentioned that it’s not a simple thing to just say CBDC can be a habit from tomorrow on.
He further stated that the banking system has been evolving in terms of currency distribution as a tiered model, but the same model can be followed for CBDC as well, we will have to see.
According to industry experts, the CBDC could have a much larger impact on the existing financial system. This step may promote financial inclusivity and modernize the banking sector apart from creating a cashless economy. That’s the positive aspect of digital currency, but how it would be utilized and for what purposes is still a topic of discussion.
Other than that, whether the technology will be decentralized or partially centralized is also yet to be decided by the regulators.
Many consider CBDC as a legalized replacement of cryptocurrencies, but in contrast to that, CBDCs could just be a digital imitation of the fiat currency in circulation. Many Nations are planning to embrace cryptocurrency in near future. At the Sidney Dialogue, Indian PM, Narendra Modi addressed the democratic nations to work together on cryptocurrency. This announcement by the PM indicates India is likely to adopt digital currency in the coming years.
