Reserve Bank of India is exploring how to introduce a rupee-backed central bank digital currency (CBDC) into its fiscal policy in an attempt to cut annual bill for minting Banknotes.
The news was published in the Reserve Bank of India’s (RBI) annual report, which indicated an inter-departmental unit has now been formed within the organization to examine the “feasibility and desirability to introduce a central bank digital currency.”
The effort comes in response to a swiftly changing landscape of digital payments and “increasing costs of managing fiat paper/metallic money,” the bank stated.
A news report from the Economic times further indicated the RBI also said that, in 2018, the cost of printing physical cash alone cost around $90 million.
While RBI didn’t reveal whether the potential CBDC may be blockchain-powered, it claimed the utilization of distributed ledger technology (DLT) in payment and settlement solution “holds the promise of significant economic gains in future.”
In the meantime, in contrast to its support for adoption of DLT at a state level, the RBI again toughened its position on crypto trading in the report, moving its focus to transactions between individuals following its prohibition on bank accounts for exchanges declared in April.
The RBI cautioned in its yearly report:
“Developments on this front need to be watched as some trading may shift from exchanges to peer-to-peer mode, which may further involve increased use of cash.”
RBI further added:
“Possibilities of migration of crypto exchange houses to dark pools/cash and offshore locations, hence raising concerns on anti-money /CFT and taxation issues, need a close watch.”