The Reserve Bank of India (RBI) has said it is studying the need to develop a digital currency. The central bank’s publication on payment systems said that if the RBI sees a need to launch a digital rupee, it will start research in this direction, theblockcrypto.com reported.
The central bank noted that private digital currencies, cryptocurrencies and virtual currencies are gaining momentum across the globe, but in India, regulators are sceptical about them because of the risks involved. Nevertheless, RBI will Crypto Method study the need for a digital version of fiat currency and if necessary, it will start investigating methods for its introduction.
This is not the first time RBI has announced a study on digital currencies. Back in 2018, the central bank had said it would set up an inter-agency group to study the need to launch a national CBDC to streamline the financial system. In 2019, the Reserve Bank governor said it was too early for CBDC due to technological challenges, but the regulator will consider the issue in the future.
The RBI’s stance on cryptocurrencies has not changed – cryptocurrencies violate the state’s exclusive right to issue a monetary unit and should therefore be banned. That said, regulators understand the importance of digital payments and have even rolled out a pilot project in India to develop offline solutions for regions with poor or no internet quality.
And while the RBI is only exploring the need to develop a digital rupee, China is already preparing the next city to test the digital yuan – a new CBDC distribution will take place in Chengdu.