The Indian finance minister Nirmala Sitharaman met the International Monetary Fund chief Kristalina Georgieva in Delhi to discuss the significance of the regulation of crypto assets and the need to have a globally coordinated, synchronised approach to the issue.
According to the Times of India, the finance minister urged that the UN agency should play a lead role in the regulation of crypto assets.
India has consistently backed synchronised global coordination on the issue of regulation on crypto assets. Furthermore, India recently stepped up to run its pilot Central Bank Digital Currency (CBDC) project as India’s central bank, the Reserve Bank of India (RBI), has asked four public sector banks to run the pilot ahead of a possible rollout in this financial year.
India’s Financial Express reported that RBI is looking to launch digital currency this year around November, as it is pilot testing the CBDC before schedule.
According to the news report, the RBI has roped in four state-run banks, including State Bank of India, Punjab National Bank, Union Bank of India and Bank of Baroda, to run the pilot internally.
A senior PSU bank official also reportedly confirmed the matter and said, “There is a pilot on CBDCs. The RBI may come with the launch this year. When it will exactly roll out the product and specifications is to be seen.”
India’s CBDC project “could become a tool for reducing time and cost for cross-border transactions,” said Reserve Bank Deputy Governor T. Rabi Sankar, to Indian media giant The Hindu.
RBI Is Consulting FinTech Companies for CBDC Launch
The news agency also reported that the RBI is also said to be holding consultations with a clutch of fintech companies, including US-based FIS, known as a global leader in technology and solutions that advance the way the world pays and how banks invest, has been holding roundtable conferences and workshops with central bankers globally on CBDCs, as per a Money Control report.
The common observation is that Ripple XRP is the bridge currency to connect all CBDCs of the world.
“FIS has had various engagements with the RBI, and, of course, our connected ecosystem could be extended to the RBI to experiment with various CBDC options,” said Julia Demidova, senior director at FIS.
According to Demidova, the fintech company is advising central banks on CBDC topics such as offline payments, programmable payments, new monetary policy toolkits, interest-bearing CBDC, fractional banking issues, financial inclusion, and cross-border CBDC payments: “whether it is a wholesale or retail CBDC transaction, our technology can also be extended to commercial banks where they can test and tokenize central bank money in the form of digital regulated money.”
RBI Act of 1934 Was Amended to Enable CBDC Pilot
In July, Ajay Kumar Choudhary, executive director at RBI, announced the CBDC launch in the Union Budget, as the RBI Act of 1934 had been amended to enable the RBI to conduct the pilot project and subsequently issue the CBDC. “The RBI is also working on a phased implementation of a CBDC in both the wholesale and retail segments,” Choudhary said.
Earlier this year, India’s Finance Minister Nirmala Sitharaman issued a public statement regarding the matter of CBDC. “It was a conscious call taken in consultation with the central bank – the Reserve Bank of India. We would like them to design it the way they would like to do it, but this year we expect the currency to come out from the central bank itself,” she said.
On the Flipside
- The Indian government’s vigilance has caused crypto companies like WazirX to settle in Dubai and register in Cayman islands. The Indian Finance Minister recently cautioned investors against crypto investments as well.
Why You Should Care
Recently, India’s finance minister pointed out that there are clear advantages to a central bank-driven digital currency because, in this day and age, bulk payments happening between countries, large transactions between institutions, and large transactions between central banks themselves are all better enabled with digital currency.