India is considering a phased roll-out of a central bank digital currency
- The Reserve Bank of India said on Thursday it is considering a "phased" rollout of a central bank digital currency.
- Deputy Governor T. Rabi Sankar said a CBDC will protect citizens from the volatility of cryptocurrencies, Bloomberg reported.
- But Sankar added that a launch will need to overcome some legal hurdles first.
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The Reserve Bank of India said on Thursday it is considering a "phased" rollout of a central bank digital currency.
Deputy Governor T. Rabi Sankar during a speech said politicians are eyeing a CBDC to protect citizens from the volatility of cryptocurrencies, Bloomberg first reported.
A digital currency, he said, will also decrease cash usage in India's economy, especially as more consumers adopted offerings like contactless payments during the pandemic.
"Central banks have increased their attention on digital currencies," Sankar said.
A CBDC is a type of central bank liability issued in digital form, which could be used by the general public.
Sankar added that an introduction of a CBDC will need to overcome some legal hurdles in foreign exchange rules and information-technology laws.
In the US, Federal Reserve Jerome Powell questioned the necessity of cryptocurrencies once the Fed rolls out its own CBDC.
Powell in May revealed that the central bank has taken further steps in exploring a digital currency and will be releasing a discussion paper this summer outlining its thinking on digital payments. Apart from the US, a number of central banks have been exploring CBDCs, spurred by strong momentum in the cryptocurrency space.
China has been leading the government-backed digital currency race since developing its CBDC in 2014 and testing a pilot programme in 2020.
The statement from the Indian deputy governor follows the European Commission's proposal to ban anonymous cryptocurrency transactions as the bloc seeks to clamp down on money laundering and terrorism financing.
The Indian government, for its part, has been eyeing cryptocurrency regulation for some time in a bid to prevent terrorism financing and money laundering. A CBDC will remove a certain level of anonymity cryptocurrencies are known for.
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