The Reserve Bank of India discussed the plan in its annual report saying that the CBDC needed to be “In line with the objectives of its monetary policy, financial stability and efficient operations of currency and payment systems.”
Calling for the adoption of the digital rupee through a graded approach, the CBDC will go through proof of concept and pilot stages before the official launch.
The central bank has been examining the risks and advantages of a CBDC, and the Finance Bill of 2022 serves as a legal framework for the asset’s launch.
“The introduction of CBDC has been announced in the Union Budget 2022-23 and an appropriate amendment to the RBI Act, 1934 has been included in the Finance Bill, 2022. The Finance Bill, 2022 has been enacted, providing a legal framework for the launch of CBDC,” the report reads.
The phased introduction of the CBDC is high on the agenda for 2022-23. India’s central bank first announced that it would work on a CBDC earlier this year. India’s Finance Minister Nirmala Sitharaman has also said that she expects the digital rupee to launch later this year.
Sitharaman said there were many advantages to a CBDC, and India is a tech-forward country when it comes to payments. The country already has a wider user base for digital and app-based payments, much like China. Analysts also believe that introducing a transparent public ledger can reduce the circulation of fake notes, which the RBI considers a problem.
India ramps up regulation
After confirming last year that it would not recognize bitcoin as currency and also reassuring investors that crypto would not be banned, India has ramped up its intention to regulate the market.
First, it imposed taxes on crypto, which many believe is too high. India’s crypto volumes have plummeted since the introduction of the tax scheme.
India believes that there needs to be cooperation internationally for regulation to truly succeed.
Instead, India’s lawmakers will take their time to draw a regulatory framework for crypto. Full regulation may take years, but the country’s stance on digital assets is slowly beginning to take shape after years of vacillation has left investors in confusion.