RBI looking at ‘pros and cons’ ahead of digital currency launch

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Proof of concept refers to a practice where the work focuses on verifying whether an idea can be turned into reality or whether the idea will work according to the imagination.

The Reserve Bank said on Friday that it was looking at the advantages and disadvantages of launching a virtual currency in the country and would adopt a graded approach to the introduction of digital currency by the central bank. Finance Minister Nirmala Sitharaman, while presenting the 2022-23 budget, announced that the central bank would introduce an Indian digital currency.

The introduction of CBDC (Central Bank Digital Currency) was announced in the Union Budget 2022-23 and an appropriate amendment to the RBI Act, 1934 was included in the Finance Bill, 2022, the RBI said in its annual report published in 2021-22. Friday. The Finance Bill, 2022 enacted, provided a legal framework for the introduction of the CBDC, it said.

“The Reserve Bank of India is engaged in the introduction of a central bank’s digital currency. The report. The Reserve Bank of India, looking at the advantages and disadvantages of introducing CBDC in India, said that it has proposed a graded approach for introducing CBDC, proof of concept, pilot and launch step by step. .

Proof of concept refers to a practice where the work focuses on verifying whether an idea can be turned into reality or whether the idea will work according to the imagination. The RBI said the CBDC’s design needs to be consistent with “stated objectives of monetary policy, financial stability” and “efficient operation of the monetary and financing system”.

Accordingly, CBDCs are examining appropriately designed components that can be implemented with little or no hindrance, the report said. After the budget announcement on February 1, RBI Governor Shaktikant Das said the Reserve Bank did not want to rush and was carefully examining all aspects before introducing the CBDC.

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