India sees “clear advantages” in CBDC

TL; DR Breakdown

• Indian’s finance minister, Nirmala Sitharaman says she sees benefits of the central bank-led digital currency.
• The minister says the government would be discuss crypto regulation after consultation.

India’s Finance Minister, Nirmala Sitharaman, has expressed her approval for a central bank-led digital currency. She sees several benefits to such a system, which she thinks would provide greater security and stability than private cryptocurrencies because bulk payments across borders, big transactions between institutions, and vast transactions between central banks of each country are all easier with a central bank digital currency.

“We see clear advantages in a central bank driven digital currency,” she said, adding that they expect the central bank to release the digital Rupee this year.

When asked about crypto regulation, the Minister said the government would be discussing it after the consultation for the CBCD, though she wouldn’t get into whether or not it would be regulating or banning cryptocurrency.

“The consultations are currently underway […] anybody interested in this field is welcome to participate, and after the consultation process is completed, the Ministry will probably sit down and think about it, which is necessary because we need the executive to be confident that we are not violating any legal requirements afterward we’ll release what our viewpoint on it is,’ she said

Future of crypto in India

Answering the question of whether she saw a future for crypto in India, she said that many of the Indians had seen possibility in it, and without any doubt, she also saw the possibility of revenue in it. On the budget 2022-23 recently announced by her, the Minister noted that the reference to “Amrit Kaal” in the budget is for more and more digitization, more and more technology.

“In every aspect of our business, infiltrating technology into the country will be a struggle because we are also labor-rich, in that we have a lot of intense skilled, semi-skilled, and partially skilled professionals,” she said. “How are we going to put these two together without harming each other?” That is where this budget is important.

Sitharaman said that India requires 75 Digital Banking Units (DBUs) because despite pushing through a nationalized banking network for 75 years, banking and financial inclusion have not been as much as we desired them to be. She stressed that the announcement of the DBUs implicitly meant that they were looking for people who were interested in setting it up and the government would be with them; she said without hesitating that the common citizen of India has adopted the digital mode of doing business and facilities are required for it.

This is not the first time that Sitharaman has spoken out in favor of a central bank-issued digital currency. In February of this year, she voiced her support for the idea, saying that it would be “a more secure medium of transaction.” She said the government will levy a 30 percent tax on gains made from any other private digital assets from April 1.