Reserve Bank of India [RBI] seeks to explore Central Bank Digital Currency: Annual Report
The released Annual Report 2017-18 of Reserve Bank of India sheds light on venturing into the feasibility of digital currency for payment. The report has been released by the Indian central bank on 29th August, that is, yesterday. RBI envisions to develop central bank digital currency [CBDC] in the domestic payment system and with this initiative the bank adds itself to the list of other global central banks having similar vision.
This new venture of the central bank of India would help to develop the digital currency that is equivalent to the Indian rupee. The report states that an inter-departmental team has been formed by the RBI for this purpose to decipher the possibility of having digital currency for domestic payment.
The payment industry operating all over the world has been experiencing "rapid changes" as noted by the monetary regulatory body. The factors that played a significant role for the central bank's attempt to explore the digital currency are the “emergence of private digital tokens and the rising costs of managing fiat paper/metallic money”.
The Annual Report
As per the statement of RBI,“[A]n inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency (CBDC).” In the initial phase of this week, RBI has set up an internal unit for conducting research on blockchain technology and cryptocurrency. It is assumed that that the unit has been functioning more than a month.It is also inclined towards drafting norms ans regulations for carrying out decentralised cryptocurrencies' trading such as Bitcoin.
RBI's announcement on its digital currency aligns with the introduction of the first state owned digital currency known as "petro" in Venezuela. The President of Venezuela, Nicholas Maduro has informed that such a major step has got support from the massive oil reserves present in the nation.
The purpose of launching petro has been to surpass the financial sanctions imposed by U.S. Iran is also one of those nations who plans to launch its own cryptocurrency for overcoming financial restriction. In the Indian scenario, the later phase of 2017 has witnessed the confirmation by the executive director of RBI regarding the research on "fiat currency" and coining the name "Lakshmi Coin" for its digital currency.
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