RBI Discussions on Digital Currency: Nirmala Sitharaman
Sitharaman, in his budget speech on February 1, had announced that the digital rupee or Central Bank Digital Currency (CBDC) would be issued by the RBI in the coming financial year. She had also announced that the government would levy a 30% tax on gains made from any other private digital assets from April 1.
Responding to questions after addressing the RBI’s central board on Monday, Sitharaman said the central bank and the government are in agreement regarding digital currencies.
She said discussions with the RBI regarding the CBDC were ongoing ahead of the budget announcement and are ongoing.
RBI Governor Shaktikanta Das added that like several other issues, this particular issue is under internal discussion between the RBI and the government.
“Whatever points we have, we discuss them with the government,” he added.
CBDC is a digital or virtual currency, but it is not comparable to the private virtual currencies or cryptocurrency that have proliferated over the past decade. Private virtual currencies do not represent any person’s debt or liability because there is no issuer. It is not money and certainly not currency.
Last week, Das said the central bank does not want to rush and is carefully considering all aspects ahead of the CBDC’s introduction.
The Trend and Progress of Banking in India report, released by the RBI in December last year, had stated that given the dynamic impact of the CBDC on macroeconomic policy-making, there is a need to initially adopt basic models and test them extensively so that they have minimal impact. on monetary policy and the banking system.
India’s advancements in payment systems will provide a useful backbone to bring a state-of-the-art CBDC to its citizens and financial institutions, he said.