India pursues scrupulously of Russia and China cryptocurrency policy and is receiving help from a number of lending institutions and financial firms to develop what will for all intents and purposes be a state-owned digital currency (CBDC).
India: ongoing work on the country’s digital currency
According to some Indian government officials, the project is now in its final phase, the final tests and improvements will be carried out by the end of 2022 when new Rupee 3.0 will be launched.
The Reserve Bank of India (RBI) with the National Bank of India, National Bank of Punjab, Union Bank of India and Bank of Baroda will test and improve the currency to the point where it will be ready to hit the market in a few months, ideally by December of this year.
“There is a CBDC pilot project. The RBI could come with the launch this year, when exactly the product will be launched and the specifications must be seen”,
said a senior official of the Central bank of the country.
American society FISwho is no stranger to granting CBDC development efforts with central banks is one of the external companies providing the necessary support for the rapid implementation of the project, online and programmable payments, financial inclusion and cross-border transactions CBDC payments should go smoothly.
Julia Demidova, director of FIS, said in an interview last week that:
“FIS has had various engagements with the RBI… Our connected ecosystem could be extended to the RBI to experiment with various CBDC options. Whether it is a wholesale or retail CBDC transaction, our technology can also be extended to commercial banks where they can test and tokenize central bank currency in the form of regulated digital currency.
Nirmala Sitharaman, the finance minister of the country is optimistic and reports that soon the currency will come into existence and Indians will soon have a sound and valuable currency to get acquainted with.
On the sidelines of the 2022 During the federal budget presentation in February, Nirmala Sitharaman said the Reserve Bank of India would issue its own CBDC in that fiscal year.
The Prime Minister of the country, Narendra Modiwent into detail explaining how:
“The digital rupee will be the digital form of our physical rupee and will be regulated by the RBI. It will be one of those systems that will allow an exchange of physical currency for digital currency.
India’s relationship to crypto adoption
The country’s relationship with cryptocurrencies, although much beleaguered as is often the case, especially in countries whose economies have established and grown over the past decades, is not the best, Bitcoin and other coins are not well regarded in these regions as there is a law in effect prohibiting them.
RBI Deputy Governor T. Rabi Sankar said earlier this year that:
“Cryptocurrencies have no underlying cash flows or intrinsic value, they are similar to Ponzi schemes and could be even worse. Banning cryptocurrency is perhaps the smartest choice that s offer to India.
A July 18 article of this year in The Cryptonomist explains precisely the path that led to India’s assessment of the risks and opportunities in digital currencies.
In 2018, a highly worded memo warned of the great danger of cryptography and prohibited its dissemination and use, except that it was later overturned by the Supreme Court of India, which struck it down in 2020.
Until now, the government has never stopped wondering about the issue and if there is one thing that is clear while waiting for a permanent opening or closing, it has decided to take advantage of the blockchain by seizing the opportunities it offers to create your own CBDC.
The government hopes that an international commission will deal in depth with the subject of crypto, NFTs, etc. and will be a kind of supranational regulator that will have the task of regulating and setting equal stakes at all latitudes and longitudes, regardless of the states. will comply with the ad hoc laws.
“The destabilizing effect of cryptocurrencies on a country’s monetary and fiscal stability. I recommend framing the legislation in this area. Additionally, the value of fiat currencies is rooted in monetary policy and their status as fiat currencies, however, the value of cryptocurrencies is solely based on speculation and expectations of high returns which are not well entrenched,”
reports concerned the Indian Minister of Finance.
Just like other Brics countries, India is also hesitant about this world though it knows and wants to take advantage of the opportunities.
Nirmala Sitharaman adds that:
“Any regulatory or prohibitive legislation can only be effective after significant international collaboration on the assessment of risks and benefits and on the evolution of common taxonomy and standards.”
Moreover, the current taxation of cryptocurrencies in India does not place the country among the small group of the most attractive going so far as to tax assets by 30%.
It may not stop there and taxes may be increased.
Coinbase and FTX plan to follow the direction taken by the Indian government to exit the country’s market.
In any case, while we do not yet know in which direction the country will go, and in the midst of a major opening up of Russia, its main trading partner and neighbor, the Reserve Bank of India is leaning decisively towards its own digital currency of central bank (CBDC).
The digital rupee will be placed alongside its counterpart FIAT and will offer one more tool to the people, in the spirit of the government helping Indians to approach this young world of crypto, to understand it and perhaps in the future not too far to adopt it.
Keeping up with the times and seizing the changing tools the market offers, riding the swings and trying to anticipate trends can make all the difference in such an interconnected and diverse world, and this was well understood by the RBI and the government.