Reserve Bank of India is working on the launch of digital currencies, bill on cryptocurrency will be introduced in Parliament next week

The RBI is preparing for the launch of the digital currency as the Indian government prepares to introduce a bill in the winter session of Parliament to establish regulations and guidelines for cryptocurrencies.

Next week, the Lok Sabha will debate the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The bill aims to “create a conducive framework for the creation of the Reserve Bank of India’s official digital currency.” It also aims to outlaw all private cryptocurrencies in India, with some exceptions for promotional purposes.

There is currently no regulation or prohibition in place in the country regarding the use of cryptocurrencies.

It should be noted that on March 4, 2021, the Supreme Court overturned an RBI circular dated April 6, 2018, prohibiting banks and entities regulated by it from providing virtual currency services.

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The Reserve Bank of India has repeatedly stated its opposition to cryptocurrencies, claiming that they pose serious threats to the country’s macroeconomic and financial stability, and that the number of investors trading on them and their claimed market value are both suspect.

According to reports, the Reserve Bank of India is working on a phased introduction of its own digital currency. A CBDC is a digital form of legal tender issued by a central bank. It functions in the same way as fiat money and can be exchanged for fiat money in a one-to-one ratio. Its only difference is in its appearance.

CBDC is similar to currency issued by a central bank, but it is not printed on paper (or polymer). It is sovereign currency in electronic form, and it would appear on a central bank’s balance sheet as a liability (currency in circulation). A CBDC’s underlying technology, form, and application can be tailored to meet specific needs. CBDCs should be able to be exchanged for cash.

Earlier this month, RBI Governor Shaktikanta Das reiterated his opposition to cryptocurrencies, claiming that they pose a serious threat to any financial system because they are unregulated by central banks.

The RBI announced its intention to create an official digital currency in response to the rise of cryptocurrencies such as Bitcoin, which the central bank has expressed concern about.

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