India's central bank says it is exploring the possibility of digital currency

Quick Take

  • The Reserve Bank of India has said that it is exploring the need for digital currency.
  • The central bank initially formed a group to study digital currencies in 2018.

The Reserve Bank of India (RBI), the country's central bank, has said that it is exploring the need for digital currency.

In a booklet on payment systems published Monday, the RBI said if there is a need for a digital rupee, it will explore how to operationalize it.

"Private digital currencies (PDCs) / virtual currencies (VCs) / crypto currencies (CCs) have gained popularity in recent years. In India, the regulators and governments have been skeptical about these currencies and are apprehensive about the associated risks. Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalize it," the central bank said.

This is not the first time the RBI has commented on researching and exploring digital currencies. In 2018, the central bank said it had formed an inter-departmental group to study and provide guidance on the "desirability and feasibility" of introducing a central bank digital currency (CBDC) in order to reduce printing costs of banknotes and other benefits.

In December 2019, RBI governor Shaktikanta Das said it is "too early" to talk about a CBDC due to technological barriers. "As and when the technology evolves with adequate safeguards, I think it is an area where the Reserve Bank will certainly look at seriously at an appropriate time," he said at the time.

THE SCOOP

Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro

By signing-up you agree to our Terms of Service and Privacy Policy