Official Claims India’s CBDC Can Do Everything Cryptocurrency Does

An official of the Indian central bank said that the central bank digital currency (CBDC) that the Reserve Bank of India (RBI) is working on will have all the capabilities of other cryptocurrencies.

He said that anything that cryptocurrencies like bitcoin and ether are capable of doing, their CBDC would also be able to do the same.

The official said that this was exactly what they were working on accomplishing through the CBDC experiments they have been conducting.

Crypto vs Digital Rupee

T. Rabi Sankar, the Deputy Governor of the Reserve Bank of India (RBI) attended an event on Friday that had been organized by the Indian Banks’ Association (IBA).

At the event, he talked about central bank digital currency (CBDC) and cryptocurrency. The RBI official said that the environment had allowed private currencies to evolve.

He added that they had realized that this put the systems, investors and the entire economy at risk. He also said that private currencies had indicated that it would be beneficial to digitize currency.

Therefore, they had come to the conclusion that creating a digital currency was the best way to go about it.

The CBDC

The deputy governor used the term ‘private’ cryptocurrencies to refer to cryptocurrencies that are not issued by the government, such as bitcoin and ether.

He stated that anything that private crypto was capable of doing, they would be able to create a currency that would be able to do the same, but without the risks associated with the former.

He added that it would have a safer format because it would be issued by the central bank and backed by the government.

He elaborated that this was the goal they were trying to achieve through their CBDC experiments. The first pilot program for the CBDC was launched on December 1st with eight banks participating in it.

It will be spread across 13 cities in the country. On November 1st, the RBI introduced a wholesale CBDC pilot aimed at government bonds trading before the retail digital rupee pilot was launched.

More use cases would be covered in the wholesale pilot, which includes money market instruments. The Indian central banker said that assessing the efficacy of all systems was the goal of the initial CBDC pilots.

More developments

The RBI official said that as the pilot program moves forward, it would work on discovering the right technology that would have the appropriate infrastructure needed for digital currency distribution.

He asserted that the digital infrastructure they were developing has many possibilities and they intended to build upon it, such as launching tokenized bonds and smart contracts.

He said that the choices at their disposal were game-changing, especially where cross-border transactions are concerned.

These transactions involve a lot of inefficiencies and launching and using a central bank digital currency (CBDC) would help address them.

As far as cryptocurrencies like bitcoin and ether are concerned, the Indian central bank wants to ban them altogether.

Back in February, Sankar had said that regulating cryptocurrencies would be futile because they have been primarily designed for bypassing the financial system.

In fact, he said that their fundamental design was to bypass the entire government itself on a large scale. Therefore, it does not wish to regulate these cryptocurrencies in the country.

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