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RBI plans to introduce digital currency in phases: Finance Ministry

06:23 PM Nov 29, 2021 | FPJ Web Desk

The Reserve Bank of India (RBI) is working on a plan to introduce a central bank digital currency (CBDC) in phases, the finance ministry told the Lok Sabha on Monday (November 29).

CBDCs or digital or virtual currency are digital version of fiat currencies. For instance: Rupee in the case of India.

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MoS Finance Pankaj Chaudhary said that a proposal from the RBI was received in October 2021.

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He said the proposal was to amend the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form.

“RBI has been examining use cases and working out a phased implementation strategy for the introduction of CBDC with little or no disruption. Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, reduced settlement risk. Introduction of CBDC would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option,” Chaudhary said.

The Ministry of Finance, in a written reply in Lok Sabha, stated, "Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, reduced settlement risk."

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