The Finance minister said in the Budget speech that the introduction of a central bank digital currency will give a big boost to the digital economy.
The Reserve Bank of India will introduce a digital rupee in another financial year beginning April 2022 after amendments proposed in the Finance Bill, 2022. 2022-23.
The Union Budget made a string of announcements on digital payments, including a plan to offer net banking to depositors with India Post and another to set up 75 digital banking units across as many districts.
The government intends to tax the transfer of ‘digital assets’, interpreted widely as cryptocurrencies, at 30%.
Finance Bill in 2022 proposes amending the RBI Act, 1934 to modify the definition of a banknote to cover digital notes issued by the central bank.
RBI officials have much progress has already been made on a wholesale account-based while a retail CBDC is likely to take longer.
Will also Digital currency lead to a more efficient and cheaper currency management system proposed to introduce digital rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23,” the finance minister said.
Head of banking, India, FIS, says they will trigger preparatory activity in the industry to offer payment mechanisms using the digital rupee.
Other effects of this in the slightly longer term could be that the dependence on UPI (Unified Payments Interface) for small value payments could potentially reduce with the digital rupee gaining traction in time,” Prasad said.
Not easy it is to see how a CBDC can increase financial inclusion – beyond current modes enabled with Jan Dhan, Aadhaar, and mobile payments.
In blockchain system will need to solve for the classic trade-offs between decentralization, security, and scalability,” Makhija said.
The planning behind the digital rupee needs to be closely linked to the growth of the Web3 and creator economies that the Prasad and Makhija observed.
Which considers crypto as an exchange of value. The level is given growth being seen on UPI and the associated stress on technology infrastructures of issuers and banks, this may be a good thing after all,” Prasad added.
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