What is a Digital Rupee and how it will fuel India’s growth? All you need to know
Digital Rupee will be issued by the Reserve Bank of India (RBI).
- The government will control the pricing of the digital rupee.
- CBDC will give a big boost to the digital economy, said Budget 2022 document.
- Digital Rupee using blockchain issued by the RBI will familiarise Indians with the benefits and efficiency of virtual currency.
New Delhi: Finance Minister Nirmala Sitharaman, on Tuesday (February 2), proposed the introduction of Digital Rupee, a central bank digital currency (CBDC), that is expected to give a big boost to India’s digital economy.
Sitharaman mentioned that India will take the route of Central Bank Sponsored Digital Currency, during her Budget 2022 presentation speech. But what exactly is a Digital Rupee or a CBDC?
What is a Digital Rupee?
A Digital Currency is a digital (electronic) form of fiat currency. Digital currency is also fungible with physical currency. Digital Rupee will be issued by the Reserve Bank of India (RBI). The underlying technology that will be powering the Digital Rupee will be Blockchain.
Balaji Kandregula, Vice President, MSRvantage, said that Blockchain technology also powers cryptocurrency, non-fungible tokens (NFTs) and it is a distributed ledger, updated in real-time.
“In a blockchain, the transaction records cannot be changed at all and the ledger is transparent and authentic, which is why it is used in cryptocurrency as well,” Kandregula added.
Who will control the pricing of Digital Rupee?
The proposed digital rupee and its pricing will be entirely regulated and controlled by the government, said Probir Roy Chowdhury, Partner, J. Sagar Associates.
Will other cryptocurrencies co-exist with Digital Rupee?
Chowdhury said that apart from the ‘digital rupee’, the government is not keen to recognize the availability of any other kind of digital currency in India.
“As a result, free-market players will not be permitted to operate or use cryptocurrencies other than the digital currency issued by RBI. This will prevent market players from entering into several digital transactions that require such other kinds of cryptocurrencies,” he added.
How will Digital Rupee benefit India?
The Union Budget 2022 document said that the introduction of CBDC will give a big boost to the digital economy. “Digital currency will also lead to a more efficient and cheaper currency management system. It is, therefore, proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23," the Budget read. Also Read: Don’t believe Google Maps blindly, you can end up driving on railway track
Avinash Shekhar, CEO, ZebPay, said that the announcement on the launch of a Digital Rupee using blockchain issued by the RBI will familiarise Indians with the benefits and efficiency of virtual currency, building an appetite for the crypto, blockchain and the multitudes of innovations and employment opportunities that these technologies are capable of fostering. Also Read: Shocking! Woman alleges she was molested in Facebook's Metaverse