• RBI to launch India's own digital currency this year: Union Budget 2022

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    RBI to launch India's own digital currency this year: Union Budget 2022
    Digital Desk: In her Union Budget address, Finance Minister Nirmala Sitharaman stated that the Reserve Bank of India (RBI)-led digital currency based on blockchain will be released in FY23.

    On Tuesday, the minister announced that the digital rupee, or central bank digital currency, will be implemented utilising blockchain technology.

    In October of last year, the Reserve Bank of India gained clearance to alter the Reserve Bank of India Act, 1934, to broaden the definition of bank note to include cash in digital format.

    A central bank digital currency (CBDC) is a sovereign currency in electronic form that appears on a central bank's balance sheet as a liability (currency in circulation). According to a poll conducted by the Bank for International Settlements (BIS) in 2021, 86% of central banks were actively investigating the possibilities for CBDCs, 60% were experimenting with the technology, and 14% were establishing trial programmes.

    The business community applauded the budget choice.

    "India will now join a handful of nations to launch its own blockchain currency. This has huge implications for finance overall and underscores India’s pre-eminence in digitised finance. Not even the United States has launched their CBC yet. Immediately, the CBC means leveraging the benefits of blockchain, lower opex, and faster settlements. We need to await full details to understand all implications," said Adhil Shetty, CEO, BankBazaar.com.

    He added, "The taxation of virtual assets is now clearly defined. So we now at least know what tax filers can expect this year. Individuals might have wanted lower LTCG taxes and and carry forward of losses similar to equity or housing. But this is at least a start."

    According to a statement released by the RBI, the Reserve Bank of India's (RBI) central board examined different problems connected to the central bank digital currency (CBDC) and private cryptocurrencies.

    Also Read: Union Budget 2022: Updates

    Governor Shaktikanta Das presided over the 592nd meeting of the central board of directors, which was held in Lucknow.

    The RBI has been working on a phased deployment approach for a central bank digital currency (CBDC), although it has expressed worries about private crypto currencies on multiple occasions.

    In October, the RBI proposed amending the Reserve Bank of India Act, 1934 with the Central Bank Digital Currency (CBDC) plan.

    The word CBDC refers to a fiat currency's virtual version. A CBDC is a digital token or electronic record of a country's official currency, such as the rupee in India.

    On the very first of the winter session in Parliament, the Ministry of Finance in a written reply said, “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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