India to launch digital rupee in 2022 via central bank says finance minister

What

Finance minister, Nirmala Sitharaman, has said that consultations with the Reserve Bank of India (RBI) are continuing regarding the launch of an Indian digital currency, or CBDC, later this year. 

Why 

India will be joining several countries looking to introduce their own central bank issued digital currency (CBDC). China has already showcased its digital yuan at the Olympics, the US is making headway on a digital dollar and the ECB is also considering a digital euro to launch by early 2023.

What next

According to the minister, the RBI will lead the design and launch of India’s digital rupee, while stressing that the government and central bank are aligned in their thinking.

The story

Sitharaman made her remarks at the India Global Summit, where a consortium of Indian startups asked the minister questions on an Indian digital currency and cryptocurrencies.

Speaking on the need for digitising India’s economy, Sitharaman explained that “Because in this day with digital payments happening between countries, large transactions between institutions, large transactions between central banks themselves of each country are all better enabled with the digital currency. And therefore we think RBI would be looking to see how best they can come up with it.”

The minister added that “many Indians” see the potential for generating revenue with cryptocurrencies, but did not provide clarity on the Indian government’s current thinking on legalisation, regulation or outright bans, something India proposed in the recent past before U-turning.

In February, the Indian government outlined a 30% tax on crypto profits, so depending on how much tax the government is able to collect via this policy could determine India’s future position. 

News has also arrived that India’s advertising regulator has announced crypto ads must now carry a disclaimer stating that “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.”

Speaking on cryptocurrencies, Sitharaman said that “After the consultation process gets duly completed, the Ministry would sit in, probably mull over it, which is required because we need the executive to be sure that we are not crossing any legal requirements.”

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