The Ministry of Finance informed Lok Sabha on Monday that it had received a proposal from the Reserve Bank of India in October to amend the RBI Act, 1934 to improve the scope of the definition of ‘bank note’ to digital currency. .
The RBI is working on a phased start-up strategy for the introduction of Central Bank Money with little or no disruption, Pankaj Chaudhary, Minister of State for Finance, said in a written reply.
“Central Bank Digital Currency (CBDC) was introduced by the Central Bank. The government received a proposal from the Reserve Bank of India (RBI) in October, 2021 to amend the Reserve Bank of India Act, 1934 to improve the scope of the definition. ‘ banking ‘digital investment has been exploring the conditions of use and developing a phased implementation strategy for the introduction of CBDC with little or no disruption.
“The introduction of the CBDC has the potential to provide significant benefits, such as reduced financial dependence, high reliance on capital, high seizures due to lower transaction costs, reduced payment risk. There are also related risks that need to be carefully weighed against the potential benefits, “Chaudhary said in a written reply.
The Reserve Bank of India has reiterated its strong views on cryptocurrencies, saying it poses significant threats to the country’s economic and financial stability and doubts the number of investors trading in them and their market value.
Meanwhile, Finance Minister Nirmala Sitharaman said in response to Lok Sabha on Monday that the government had no proposal to recognize Bitcoin as a national currency.
He also informed the House that the government is not collecting information about Bitcoin transactions. Regardless of whether the government has a proposal to recognize Bitcoin as a currency in the country, the Finance Minister said “No, sir”.
Government plans to introduce Cryptocurrency and Regulation of the Official Digital Money Bill 2021 in the ongoing Winter Session of Parliament. The Bill seeks to prevent all private funds except a few to promote basic technology while allowing for official digital currency through the RBI.
RBI Governor Shaktikanta Das also earlier this month reiterated his views against allowing cryptocurrencies, saying they are a major threat to any financial system as they are not regulated by major banks.
The RBI had announced its intention to go out with the official digital currency in the face of the rise of cryptocurrencies such as Bitcoin, a central bank that has had many concerns.
Private digital currencies / virtual currencies / cryptocurrencies gained popularity over the last decade or so. Here, regulators and governments have been skeptical about these currencies and are concerned about the associated risks.
RBI Deputy Governor T Rabi Sankar in August said India was considering gradually introducing a digital currency that says its time now. China has already begun testing its digital currency, while the Bank of England and the US Federal Reserve are also monitoring it.