India’s official digital currency will be launched in early 2023 and will be a sovereign-backed facility, a senior government source said
Finance Minister Nirmala Sitharaman spoke in a budget speech last week about the imminent introduction of the central bank-backed “digital rupee.”
Government sources who asked for no name said that digital currencies issued by RBI are numbered in units, just as all fiat currencies have unique numbers.
“Units issued in digital rupee are included in the currencies in circulation. They are not much different from fiat currencies. They are fiat currencies in a more electronic form, so in a sense the government mandated electronic wallets, the source said.
The source added that the RBI has indicated that the digital rupee will be ready by the end of the next fiscal year. The digital rupee blockchain, being developed by the Central Bank, can track all transactions, unlike the mobile wallet systems currently offered by private companies.
Explaining further “With electronic wallets provided by private companies, people are currently transferring money to private companies, and individual businesses keep them on their behalf and pay the merchants when a transaction occurs.”
“In the case of digital rupee, instead of banknotes, the central bank’s digital currency is held on the mobile phone and sent from there to all merchants. It is fully supported by the state ‘Source said.
If money is sent to a private company’s electronic wallet, in addition to the charges charged by such company, there is also the credit risk of that company associated with that money.
Instead of carrying this wallet, I carry money in the the phone, the source said. In budget 2022-2023, Finance Minister Nirmala Sitharaman said the introduction of the Central Bank Digital Currency (CBDC) would greatly boost the digital economy.
“Digital currencies will also lead to more efficient and cheaper currency management system. Therefore, it has been proposed to adopt the digital rupee using blockchain and other technologies issued by the Reserve Bank of India from 2022-23. ”
The exact regulation governing this Central Bank Digital Currency (CBDC) is yet to be finalised.
CBDC is a digital or virtual currency, but cannot be compared to any private virtual currency or cryptocurrency that has grown over the past decade. Private cryptocurrencies do not represent personal debt or debt because there is no issuer.
The government has already stated that private cryptocurrencies will not become a legal tender. RBI strongly opposes private cryptocurrencies that could affect national security and financial stability.
