The Central Government has informed in Lok Sabha that Reserve Bank of India (RBI) is working out a phased implementation strategy for introduction of Central Bank Digital Currency (CBDC) by examining use cases, to avoid any disruptions.
On the first day of winter session of the Parliament, the government received questions regarding the ban of cryptocurrency and the RBI’s plans to introduce an official digital currency. It was questioned whether the government has received any proposal to introduce CBDC, along with the details of the proposal and the plans to introduce digital currency.
“The purpose of creating a digital currency is to provide significant benefits, such as reduced dependency on cash, higher seignior age due to lower transaction costs and reduced settlement risk,” MoS Finance informed Lok Sabha in its reply.
It further said that the RBI moved a proposal in October seeking to amend the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form.
The new digital currency would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option, he said. However, be warned that there are also associated risks which need to be carefully evaluated against the potential benefits.