India amasses 5 million central bank digital currency users
India has adopted a cautious approach to establishing a CBDC, and local authorities have refused to regulate cryptocurrency transactions.
According to Shri Shaktikanta Das, governor of the Reserve Bank of India (RBI), India is still exploring a central bank digital currency (CBDC), but it is not in a hurry to implement one. Since the commencement of the digital rupee pilots in late 2022, India has amassed 5 million retail CBDC customers and 16 banks, Das claimed in an inaugural talk at the RBI Global Conference on digital public infrastructure and new technologies on August 26. The RBI governor stated that India’s CBDC trials encompassed both retail and wholesale divisions, with the retail pilot focussing on the initial use case of payments.
India should not rush to implement a CBDC, says RBI governor
At the conference, Das emphasised that India should not rush to implement a “system-wide CBDC” until it has a thorough knowledge of its possible impact on users, monetary policy, the financial system, and the economy.
“Such knowledge would come from the collection of user data in pilots. The actual implementation of CBDC can be done gradually,” Das added. He then emphasised his belief that CBDC “undoubtedly” has the capacity to “underpin the payment systems of the future,” both for domestic and cross-border payments.
According to Das, one of CBDC’s programmability aspects might be securing the delivery of payments to the intended user. “Tenant farmers frequently struggle to obtain agricultural credit for inputs and raw materials because they lack the necessary land title to submit to banks,” the governor remarked, adding that CBDC might be a useful instrument in establishing farmer identities and producing carbon credits. Das cited characteristics such as anonymity and offline availability, which are also recommended for phased rollout.
India’s cryptocurrency regulations remain unclear
Das’s current remarks are consistent with India’s original objectives for a smooth CBDC testing process. India’s cautious approach to introducing a CBDC parallels its position on experimenting with cryptocurrencies such as Bitcoin ($62,838).
Despite certain local agencies approving the return of Binance, a prominent global crypto exchange, to India, other regulators have purposely refused to oversee cryptocurrency transactions. Pankaj Chaudhary, India’s Minister of State for Finance, stated in early August that the Indian government had no immediate intentions to regulate cryptocurrency sales and purchases.
“Crypto assets or Virtual Digital Assets are unregulated in India, and the government does not collect data on these assets,” he told me. According to local reports, India is presently working to revamp its regulatory approach to digital assets, with the Department of Economic Affairs publishing a significant consultation document on cryptocurrency regulation.
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