RBI mulls own crypto currency amidst regulatory concerns: report
22 Nov 2021
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Reserve Bank of India (RBI) is toying with the idea of a central bank digital currency (CBDC), which would be a legal tender like currency notes issued by the bank and could be widely used by the public.
Reports citing P Vasudevan, chief general manager at the Department of Payment and Settlement of RBI, said the bank may launch a pilot project in the fiscal year starting 1 April 2022.
“I think somewhere it was said that at least by the first quarter of next year a pilot could be launched. We are bullish on that,” Vasudevan was quoted as sating at the State Bank of India’s Banking and Economic Conclave on Wednesday.
A CBDC is a digital form of a legal tender issued by the central bank with potential wide use as a mode of payment and to store value. The CBDC may help governments helidrop money directly into the pockets of the needy during times of stress or emergencies.
The reports come amidst government moves to introduce a crypto currency law in the parliamentary session that begins this month. While the government will tighten regulations to deter investors from holding them, it is unlikely to ban private digital coins altogether, according to sources.
Instead, it may pick and choose, so that only government approved and stock-exchange listed crypto currencies are allowed to be traded, say reports, adding that trading in crypto coins that are not approved by the government will be penalised.
Such a verification process would create obstacles for thousands of unregulated currencies that thrive in the absence of regulatory scrutiny.
Prime Minister Narendra Modi, in his first comment on crypto currency, on Thursday called upon world’s democracies to work together to ensure crypto currency "does not end up in wrong hands, which can spoil our youth."
Earlier this year, the government considered criminalising the possession, issuance, mining, trading and transference of crypto-assets. Its stance has changed since then -- but only slightly, according to the two sources, who said hefty capital gains and other taxes may be levied to discourage crypto currency trading.
