The Reserve Bank of India published a report on the country’s banking industry trends, in which it raised the issue of launching its own digital currency.
Depending on the use cases, central bank digital currencies can become a complex financial instrument, as stated in a document submitted by the Reserve Bank of India (RBI). Government stablecoins can be used to efficiently conduct international payments, so in the future they can become a safe, reliable and convenient alternative to regular money, and used by correspondent banks.
Many central banks are conducting research and discussing how best to use digital currencies. RBI believes that before the massive introduction of any digital currency, it is necessary to solve important questions about the elements of its design, for example, whether the state cryptocurrency will be universal, or only individuals and organizations can use it.
The regulator also noted that taking into account the possible impact of state digital currencies on macroeconomic policy, their basic models need to be worked out and thoroughly tested. This will reduce the potential negative impact of government digital currencies on global monetary policy and the banking system.
For the digital rupee, the scale of its launch and distribution to the population needs to be assessed in order to determine its baseline model that is most suitable for performing payment transactions. RBI considers it necessary to address the question of what the architecture of the distribution of the digital rupee in India should look like. For example, will RBI be the only institution directly issuing the digital rupee, or can commercial banks also become participants in this process.
The regulator added that it is studying the options for using its own digital currency and is developing a phased strategy for its implementation with minimal risks. Earlier, Shri Vasudevan, head of payments and settlements at RBI, said that testing of the digital rupee could begin as early as next year. Former Indian Economy Minister Subhash Chandra Garg believes the launch of government stablecoins will reduce demand for cryptocurrencies.
