Finance minister Nirmala Sitharaman announced that the RBI will roll out the Central Bank Digital Currency (CBDC) in FY23.
She said that the CBDC will be based on blockchain technology.
"Digital rupee to be issued using Blockchain and other technologies by the RBI starting 2022-23. This will give a big boost to the economy," said Sitharaman in her Union Budget 2022-23 speech in Parliament.
The RBI is in the process of rolling out its own version of a virtual currency.
The CBDC will be a digital version of fiat money that will co-exist will hard cash.
The move on CBDC comes at a time when there has been a huge shift seen towards private virtual currencies called cryptocurrencies.
CBDCs are presently mostly in the hypothetical stage, with some in proof-of-concept programmes.
However, more than 80 per cent of central banks are looking at digital currencies.
China's digital RMB was the first digital currency to be issued by a major economy. On September 27, 2021, Tajikistan announced the creation of a CBDC with the Fantom Foundation, and Nigeria was the first African country to launch its CBDC on October 25.
The Bank of America said in its recent report that a US CBDC would differ from the digital money currently available to the public because it would be a liability of the US Federal Reserve, not a commercial bank, and so would have no credit or liquidity risk.
The US Fed has also published a discussion paper on the benefits and risks of a CBDC.
Earlier, the Indian government was slated to introduce new regulations for cryptocurrency during the Winter Session of Parliament, which kicked off on November 29.
The session ended without seeing the 'The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021'.
