India’s Central Bank Further Postpones Its Plans for Central Bank Digital Currency

India’s central bank - Reserve Bank of India (RBI) - has further postponed the plans to launch its own state-owned central bank digital currency (CBDC), reports local new publication The Business Line.

Last year in 2018, the RBI had announced that it is looking for issuing a CBDC pegged to the Indian Rupee. At that time the local Indian media said that the step was likely proposed to reduce the bank note bill which currently costs $90 million to the exchequer.

After taking a harsh stand on trading cryptocurrencies and banning local banking institutions to do business with crypto exchanges, the RBI has also formed a inter-governmental department to understand the feasibility of digital currencies. However, the report from the department was never made public.

In the latest twist, one of the internal sources said: “The government doesn’t want the digital currency any more. It thinks it is too early to even think about a digital currency”.

The basic purpose behind RBI’s earlier idea of launching a CBDC was to keep a check on concerns relating to money laundering, black money, cyber-security threats and other things. But the sad thing is that the RBI has yet not formed a formal unit which can dedicatedly look into the matters of emerging FinTech technologies like blockchain and cryptocurrencies and it shows the lack of preparedness for cryptocurrency trading.

“It is premature for RBI to launch crypto-rupee, as more understanding of the crypto economy need to be achieved. It is a right decision to delay the process and see how the publicly traded peer-to-peer economy is shaping up,” said Praveen Kumar, founder of cryptocurrency exchange Belfrics.

While other big economies like Sweden, Singapore, and the UAE experiment with CBDCs India is most likely to observe the developments taking place globally before taking any definitive stand.

Blockchain expert and CEU of uTrade Solutions Kunal Nadwani said: “Crypto-currencies will be mainstream and ubiquitous, and governments all over the world will launch fiat cryptocurrencies, whether out of compulsion or choice”.

“Since governments have the power of taxation, and they can declare any digital token as legal tender for payment of taxes, they can have fiat tokens. But it will take time before central banks are able to make this transition because the economic effects of crypto are sizeable and largely unknown.”