India To Pilot CBDCs Next Year Q1
The pilot phase of India’s Central Bank Digital Currency, the Digital Rupee, is slated to start in the first quarter of next year. India will join the growing list of countries that are exploring digital payment technology to build an alternative financial system. The Digital Rupee will be minted and released by the Reserve Bank of India (RBI) and will be fully backed by the government.
This announcement was made by a senior official of the RBI during an event organized by the State Bank of India. The official, Mr. Vasudevan, said that he thinks that the RBI would begin testing the Digital Rupee by the first quarter of 2022. He noted that the project is large, complex, and would therefore be launched slowly.
Vasudevan also pointed out that due to the intrinsic nature of CBDCs being an integral part of plunging India into the next level of internet experience, the project must be properly planned and launched to avoid errors with untold effects. Vasudevan’s statement sets a clearer guide towards the much-anticipated Digital Rupee.
India’s Digital Rupe to Scale Several checks
According to Vasudevan, India will not implement the CDBC policy without first conducting the safety procedures. He stated that the RBI will first investigate whether the CBDC can avoid middlemen and what the regulatory status will be. He stated that the RBI will determine the CBDC’s centralization status.
The governor of India’s Central Bank spoke earlier this year about plans to issue a CBDC before the end of 2021, but there was no specific date for the release at the time. Several sources, however, stated that the apex bank was working to achieve project deployment status.
To determine the best working policy for the Digital Rupee, the RBI reportedly consulted experts in economics, finance, and digital technology. The announcement of a possible launch comes as the Indian government examines the digital financial system more closely.
How Will This Affect Cryptos in India?
The Indian government’s decision to launch a CBDC is aimed towards creating a parallel to cryptocurrency that is under the government’s control. The Indian Parliament recently held a hearing to determine its position on cryptocurrency use in the country.
Indian Prime Minister Narendra Modi had previously stated that cryptocurrencies can “corrupt” India’s large youth population. Modi’s statements have betrayed the Indian government’s seeming bias against the use of cryptocurrencies and provide further support for the theory that the government could declare cryptos as assets and not payment systems. But the government is yet to release an official statement about the legal status of cryptocurrencies and what regulations it would enforce.
India’s crypto community was forced to use P2p trading back in 2018 after the government banned crypto trading. But since that ban was overturned in 2020, the community has surged in number and volume of investment to put India among the first five countries with the highest crypto investors. More Indian crypto investors are embracing the digital payment system and partnering with foreign firms to develop crypto solutions for the Indian market.
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