This week, India’s Finance Minister Nirmala Sitharaman announced that New Delhi was planning to roll out its own central bank digital currency (CBDC) later this year.
At the India Global Forum 2022 in Bengaluru this week, Sitharaman said, “It was a conscious call taken in consultation with the central bank – the Reserve Bank of India. We would like them to design it the way they would like to do it, but this year we expect the currency to come out from the central bank itself.”
The government has been exploring the option for more than a year, and is currently consulting with stakeholders and industry leaders on a CBDCs.
“After the consultations are over, the ministry will take necessary steps,” Sitharaman said. The Finance Minister applauded the industry’s willingness to accept a 30% tax on crypto earlier this year.
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India is estimated to be home to roughly 15 to 20 million crypto investors, who hold approximately 400 billion rupees (around $5.2 million) in cryptocurrencies.
If issued, a CBDC would make India one of the largest global economies to launch a digital currency. China has already begun piloting its digital yuan, which it has been working on since 2014.
The Reserve Bank of India governor Shaktikanta Das chimed in on cryptocurrencies last week, telling the media: "We are carefully and cautiously examining and progressing ahead as there are multiple risks. The biggest risks are related to cyber security and the possibility of counterfeiting."
A digital rupee, however, would pave the way for easier bulk payments and improve the ability of central banks to enable larger transactions among central banks, the government said.
According to the U.S. government, more than 100 countries around the world have already started exploring CBDCs. Yesterday, President Biden signed the first executive order on cryptocurrencies, paving the way for more research into CBDCs and greater regulation around the growing sector.