The RBI is currently determining whether launching a CBDC is workable. Or if it is possible at the halfway point of 2022.
India Plans to Implement CBDC in Stages
RBI advocated a 3-step method for bringing out CBDC. Mostly with minimal interruption to the old monetary sector. Indian finance minister Nirmala Sitharaman addressed the plans for this year. He mentioned the development of a digital rupee to increase the digital economy.
RBI revealed evaluating the benefits and drawbacks of adopting a CBDC in its report on 27th May. In the study, the RBI emphasized the importance of India’s CBDC. Its ability to adhere to India’s monetary policy and economic security. Also, its seamless currency and payment method operations.
Due to this demand, RBI is studying the different design features of a CBDC. Once that could coexist within the old fiat currency without disturbances. The Indian Finance Bill 2022 needed the creation of a 30% crypto tax on unrealized profits. It also creates a legislative foundation for the rollout of a digital rupee. The RBI offers a tiered method for CBDC implementation. It will move through PoC, pilots, and rollout phases. The RBI determines if launching a CBDC is workable and operable at the halfway point of 2022.
RBI Warned Against Cryptocurrency Dollarization
RBI officials said crypto would weaken their ability to determine the fiscal system. Also, their ability to manage the economic model. The RBI has reportedly raised concerns about crypto adoption. It claims that it will eventually lead to the “dollarization” of the Indian economy.
On 23rd May, the Economic Times reported the RBI’s concern. Their concerns about USD-dominated cryptos stealing market shares from the Indian rupee. This week, RBI officials briefed the parliamentary finance committee, including Governor Shaktikanta Das.
They talked about their scepticism about crypto’s effect on the banking system in it. Most cryptos are USD-denominated and distributed by foreign private corporations. It could lead to the dollarization of a part of their economy. It would be detrimental to India’s sovereign interests.
They stressed that it would impede the RBI’s ability to set monetary policy. Also, its ability to control the country’s economic model. Anti-crypto clichés have been re-emphasized. Particularly about the RBI’s concerns about the use of cryptocurrency in cross-border transactions.
The RBI has shown anti-crypto sentiment twice this month. The Coinbase CEO said that the exchange’s sudden shutdown of its UPI in India was due to RBI’s influence. He explained that they had to suspend UPI some days after its launch. Since the RBI applied soft pressure BTS to test and disable any payments going across UPI.