India to use tiered approach to launch CBDC: RBI annual report

Further consolidating the Indian introduction of internal Central Bank Digital Currency (CBDC) In 2022-23, the Reserve Bank of India (RBI) has proposed a three-step tiered approach for rolling out a CBDC with “little or no disruption” to the traditional financial system.

In February, while discussing the 2022 budget, India’s finance minister Nirmala Sitharaman talks about digital rupee rollout Provide a “big boost” for the digital economy.in the annual report release On Friday, India’s central bank, the RBI, revealed the pros and cons of exploring the introduction of a CBDC.

In the report, the RBI emphasized that India’s CBDC needs to be in line with India’s goals related to “monetary policy, financial stability, and the efficient functioning of monetary and payment systems.”

Based on this need, RBI is currently working on various design elements for a CBDC that could coexist with existing fiat systems without disruption. Indian Finance Act 2022 30% crypto tax on unrealized gainswhich also provides the legal framework for the launch of the digital rupee:

“The Reserve Bank recommends a graded approach to the introduction of the CBDC, working through proof-of-concept, pilot and launch phases.”

By mid-2022, in a proof-of-concept phase, RBI is verifying the feasibility and functionality of launching a CBDC.

related: RBI warns of crypto ‘dollarisation’ of Indian economy

Earlier this month, on May 17, RBI officials reportedly warned against the adoption of cryptocurrencies, citing the risk of “dollarization” of the Indian economy.

As Cointelegraph reported based on the Economic Times’ findings, key RBI officials, including Governor Shaktikanta Das, expressed concern about a dollar-dominated cryptocurrency world. An official, speaking on condition of anonymity, said:

“Almost all cryptocurrencies are dollar-denominated and issued by foreign private entities, and it could eventually lead to the dollarization of parts of our economy, which would be against the sovereign interests of the nation.”

“it [crypto] would seriously impair the RBI’s ability to determine monetary policy and regulate the country’s monetary system,” they added.