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Does an RBI Cryptocurrency Need to Set Aside the Private Ecosystem?

by CBDC Insider
February 3, 2021
in Asia, Business
Reading Time: 2min read
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Does an RBI Cryptocurrency Need to Set Aside the Private Ecosystem?
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RBI recently announced its intent to explore its own central bank digital currency (CBDC). As a further activity that may be related, the Government of India recently announced that it was coming up with a law on cryptocurrency. These announcements were only left at the statement of intent level, and no details were made available.

The announcements have on the one hand led to fright and fear in the eyes of those who have been dabbling into trading of cryptocurrencies, while on the other hand, this law and the RBI announcement may be seen as the first steps toward creating a positive central bank crypto currency – to be created, issued and managed by RBI.

A recent survey found that 80% of central banks are engaged in investigating CBDC, and half have progressed past conceptual research to experimenting and running pilots. China has already rolled out its own CBDC, and is testing it in a limited way. Central banks of England, Canada, Japan, Singapore, Hong Kong have been at advanced levels of designing and prototyping such systems, including working on collaborative projects like testing cross-border payments even in the early days.

RBI has not participated in any proof of concept or CBDC project that some of the other central banks have, or at least it has not been disclosed so far. It’s time, therefore, that they woke up to it, and not be left behind in understanding this new instrument and the enormous potential it carries.

We will try to understand the concept, context and characteristics of a central bank digital currency or CBDC.

Providing cash to use for general payments is the key task of a central bank. Payment instruments like cash must be inexpensive, accessible to all and available as required. Digital money is another form of cash that can made available by the central banks. However, unlike cash, digital money is controlled and is in the ‘custody’ of licensed banks.

Read more: https://economictimes.indiatimes.com/markets/stocks/news/does-an-rbi-cryptocurrency-need-to-set-aside-the-private-ecosystem/articleshow/80648757.cms

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