New Delhi: The Union government on Monday informed Parliament that it has received a proposal from the Reserve Bank of India (RBI) last month to expand the ambit of digital currency under the definition of ‘bank note’.
RBI had introduced the proposal for Central Bank Digital Currency (CBDC) in October to amend the Reserve Bank of India Act, 1934.
The term CBDC refers to the virtual form of a fiat currency. A CBDC is an electronic record or digital token of the official currency of a country, for example, the rupee in India.
Ahead of the Winter Session in Parliament, the Finance Ministry in a written reply said, “The introduction of a CBDC has the potential to provide significant benefits, such as less dependence on liquidity, higher seniority due to lower transaction costs, lower settlement risk.” .
This will likely lead to a more robust, efficient, reliable, regulated and legal tender-based payment option, the ministry said. However, the ministry said that “there are also associated risks that need to be carefully assessed against the potential benefits.”
Earlier this month, Prime Minister Narendra Modi chaired a high-level meeting on cryptocurrencies with officials from RBI, SEBI and the Finance Ministry.
The government received questions on the ‘ban’ of cryptocurrencies in India and the RBI’s plan to introduce a legal digital currency.
Finance Minister Nirmala Sitharaman, in response to a question in Parliament on Monday, said that the government has no proposal to recognize bitcoin as a currency in the country. He also told the House that the government does not collect data on bitcoin transactions.
Earlier, the central government had said that they would introduce a bill banning cryptocurrencies in the country. The bill, if passed, will create guidelines for regulating cryptocurrencies in India. The bill aims to ban crypto coins, while providing a framework for the creation of an official digital currency to be issued by the RBI.
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