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By RTTNews Staff Writer | Published: 1/26/2021 9:32 AM ET
The Reserve Bank of India (RBI) is set to explore the possibility of Central Bank Digital Currency or CBDC, according to a RBI booklet called "Payment and Settlement Systems in India." CBDC's are discussed in the booklet in Chapter 25 headlined as "The Road-map."
The RBI refers to CBDC as a legal tender and a central bank liability in digital form denominated in a sovereign currency and appearing on the central bank's balance sheet.
India's central bank adds that CBDC is a form of electronic currency which can be converted or exchanged at par with similarly denominated cash and traditional central bank deposits.
The RBI notes that central banks around the world are now forced to examine whether they could leverage on technology and issue fiat money in digital form as innovations are changing the payments space rapidly.
In India, the regulators and governments have been sceptical and are apprehensive about the risks associated with the ever popular private digital currencies, virtual currencies and crypto currencies.
Last week, the Bank for International Settlements (BIS), also known as the central bank of central banks, included exploring CBDC feasibility as one of the six key areas set out in its annual work program for 2021.
The BIS Innovation Hub (BISIH) has already launched a new project to develop a proof of concept (PoC) platform using multiple wholesale CBDCs to explore the feasibility of faster and cheaper cross-border payments.
CBDCs are slated to be the digital equivalent in value to a nation's paper currency and are subject to the same government-backed guarantees. In addition to printing money, central banks can issue CBDCs as a digital representation of a country's fiat currency. CBDCs are expected to be used for interbank settlements.
While the global economy races to embrace digital payments, central banks also are looking to investigate and support innovation while maintaining monetary policy and financial stability as they issue and distribute currency.
According to a recent survey by BIS, about 80 percent of central banks surveyed are engaged in some form of work to develop CBDCs, and about 40 percent of central banks have progressed from conceptual research to experimenting with concept and design for CBDCs. Central banks representing a fifth of the world's population say they are likely to issue the first CBDCs in the next few years.
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Article written by an RTT News Staff Writer, and posted on the RTT News.com website.
Article reposted on Markethive by Jeffrey Sloe
