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Sunday, May 19, 2024

RBI works to make pilot to test general-purpose digital currency in India a possibility

A pilot to test a general-purpose digital currency will soon become a possibility in India. The Reserve Bank of India is working toward a “phased implementation strategy” of the country’s sovereign digital unit or Central Bank Digital Currency (CBDC). 

Deputy governor T Rabi Sankar, who said this last month, has now announced that the RBI is expected to come out with a model on initial adoption of CBDC as early as “the end of this year.”  

Sankar stated. “We are evaluating the issue of scope, technology, distribution and validation mechanism etc.”  

A CBDC is a type of virtual money or cryptocurrency that a central bank issues as an alternative to its currency.

These are mostly stable coins backed by government reserves, and their value is not subject to erratic market movements like private crypto assets like Bitcoin or Ethereum.

A couple of years ago, the crypto business was ignored by much of the corporate world. They had written off cryptocurrencies and disregarded the groundbreaking blockchain technology that had enabled them to exist. Some have even bought into the idea that cryptos are a fraudulent enterprise aimed at luring the gullible in society to buy in a commodity with no fundamental worth. Most saw it as a clever tech-based pyramid scheme doomed to collapse. 

However, all that has changed today. While more than 8 million civilian investors benefit from crypto investing through platforms such as CoinSwitch Kuber, more companies in India and around the world are adopting cryptocurrency. 

The calls to accept cryptocurrency from IT thought leaders such as Infosys co-founder and chairman Nandan Nilekani are growing louder by the day. Today’s regulators are increasingly open to cryptos and crypto technology. For example, the Reserve Bank of India (RBI) outlawed cryptocurrencies a year ago. But now, there is widespread suspicion that it is on the verge of launching a central bank digital currency (CBDC) for the Republic of India. Most Indian enterprises now have some faith in the country’s crypto industry’s long-term viability. 


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