India might be launching its own state digital currency. India’s central bank is researching how to introduce a rupee-backed central bank digital currency. This is a bid to reduce its hefty annual bill for minting physical cash.
RBI stated multiple things in its annual report, published on Wednesday. An inter-departmental unit will form within the organization. It aims to study the “desirability and feasibility to introduce a central bank digital currency.” The effort is a response to a rapidly changing landscape of digital payments. Furthermore, the rising costs of managing fiat paper/metallic money is getting too much.
The RBI also said that, for 2018, the cost of printing paper notes alone totaled nearly $90 million. Whether the potential CBDC will be blockchain powered or not, is still unknown. Although it did claim the use of distributed ledger technology “holds the promise of significant economic benefits in future.”
Meanwhile, in contrast to its support for adoption of DLT at a state level, the RBI again toughened its stance on crypto trading. It’s shifting its focus to transactions between individuals following its ban on bank accounts for exchanges announced in April.
The ban might cause some trading to shift from exchanges to peer-to-peer mode. Which may also involve increased use of cash, fears RBI. Since the RBI’s bank account ban went into effect in July, local exchanges have been adopting various methods to find new revenue models. These include moving business focuses to peer-to-peer trading.