Deputy Reserve of Bank of India (RBI) Rabbi Sankar has identified cyber security and digital fraud as two main challenges in launching a central bank digital currency (CBDC).
CBDC is a digital form of fiat money and is not the same as a personal cryptocurrency. This is a legal tender issued by the central bank in digital form and can be exchanged for one-to-one with fiat currency. The only difference between the two is a form.
The RBI worked to launch CBDC, Sankar said during a post-policy press conference on December 8, CBDC would have a wholesale and retail section for it, the Deputy Governor.
The comment came at the time the government worked on the law to regulate the cryptocurrency and there was a growth of debate around the CBDC and Cryptocurrency in the context of the Indian economy.
On July 22, Sankar said the CBDC has the potential to provide significant benefits such as reduced dependence on cash, higher seigniorage due to lower transaction costs and reduced risk of solving.
However, it has some risks too, Sankar said. CBDC will require careful calibration and the approach of nuances in implementation, he said, adding consideration of image boards and stakeholder consultations is important.
“Technology challenges are also important. As said, every idea must wait for the time. Maybe the time for CBDC is near,” he said.
RBI has, time and once again, emphasizes that CBDC is not a personal virtual currency.
“CBDC is a digital or virtual currency but not comparable to the private virtual currency that has mushroomed over the past decade,” Sankar said on July 22.
Personal virtual currencies sit in disagree with the historical concept of money. They are not commodities or claims in commodities because they do not have intrinsic value, Sankar said, describing as opportunistic claims that the digital currency is similar to gold.
While working on the CBDC model, the Governor of RBI Shaktikanta Das has several occasions warned against Cryptocurrency such as Bitcoin, said the central bank has a deeper concern that has been communicated to the government. The urgency for cryptocurrency bills comes from what is a lot in the government see as a sector growth that is not set unlocked. On November 13, Prime Minister Narendra Modi led the meeting of the Cryptocurrency, which was attended by a meeting of the Standing Parliament Committee on Finance with various stakeholders from the digital currency ecosystem.
