India may have been battling with uncertainties especially concerning its crypto regulations, however, its central bank, the Reserve Bank of India (RBI), has now shown interest in offering basic models of a central bank-issued digital currency (CBDC). Only after this, would it start introducing a more sophisticated version.
RBI Becoming More Open-minded About Crypto?
A Tuesday publication dubbed “Trend and Progress of Banking in India 2020-21″ has also shed more light on the approach that the RBI is taking on a CBDC.
Interestingly, this development is a major indication that the RBI might now be softening its stance on cryptocurrency-related activities, having been absolutely against it in the past. The publication reads;
“A CBDC in its simplest form would provide a safe, robust, and even more convenient alternative to physical cash. And would also offer better scalability, liquidity, and more ease of transactions than other existing forms of money.”
The strategy being employed by the RBI is to first introduce the CBDC in its simplest model and test it extensively in the process, to analyze the degree of impact it has on the banking system and monetary policies.
Speaking about the potential impact of a CBDC on “macroeconomic policymaking,” the report also highlights how India has made good progress in payment systems, which will ultimately act as support when it’s time to roll out a more sophisticated CBDC to citizens and financial institutions.
Meanwhile, questions are being asked regarding whether the CBDC would only be useful for retail purposes (CBDC-R), or wholesale use (CBDC-W).
In his response, the RBI’s Deputy Governor, T Rabi Shankar says both types of CBDC are presently being considered. But then he added that while a lot of work has been done on the wholesale CBDC, the retail-based one is proving to be more cumbersome and will take some more time. Shankar then confirmed that whichever of the two, that gets ready first will be released for pilot testing immediately.