India's digital currency needs nuanced approach: RBI deputy governor

economictimes.indiatimes.com:

digital currency as it would have various implications for the economy and monetary policy, Reserve Bank deputy governor T Rabi Sankar said Thursday.RBI is planning to come out with a digital currency using blockchain technology in 2022-23. «I think almost all central banks, and we are no exception, will probably go in for a very careful and calibrated nuanced manner… assessing impact all along with the line and then making the course correction depending on what is most desirable,» he said at an event organised by economic thinktank ICRIER. Finance minister Nirmala Sitharaman, had in her Budget speech on February 1, announced that digital rupee or Central Bank Digital Currency (CBDC) would be issued by the RBI in the coming fiscal year.

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This, he said, was given the large number of uncertainties in terms of which model works, which design works well in terms of its impact on the banking system and on data privacy on monetary policy. The essential learning does not come from global experience but basically from your own experience, he said. Observing that one of the principles for introduction of any technologies, especially for a central bank, is that it should «do no harm», he said. As far as India is concerned, he emphasised that RBI is looking at CBDC as just the digital form of paper currency and no distinction whatsoever. He also added that the digital currency planned by the central bank is unlikely to be interest bearing. Highlighting that CBDC would have cost and distributional efficiency, he said, the other motivation for introduction is settlement efficiency.