Indian Finance Minister Nirmala Sitharaman declared that the RBI would deploy a digital rupee in 2022-23 “utilizing blockchain along with other technologies” during her presentation of the Union Budget.
Due to blockchain’s high power consumption, industry experts recommend that India’s government host its proposed digital money in alternative “centralised” technological models. In a storey in The Economic Times, senior officials said the RBI could either directly provide the planned ‘digital rupee’ to individuals, or issue digital currency to banks and then distribute it to citizens via the’retail indirect’ route.
“Even with the most energy-efficient equipment, blockchain consumes a significant amount of electricity. According to an official who has been briefed on the conversations, “The settlement time is higher and there are authorization concerns.” It’s possible for the RBI and banks to adopt blockchain, but clients can still transact using traditional technology, a government official said.
It is a form of fiat currency that has been converted into a digital form by central banks. Private cryptocurrencies, on the other hand, are not yet recognised by the government as legal tender.
Experts believe that now is the best time for India to launch CBDC, as other nations including China, Russia, the Bahamas, and the United States are already using CBDC.
There is still a chance that CBDC could be deployed in 2022 or 2023, though.
Enterprise Ethereum Alliance regional representative Samrat Kishor stated in an interview that “according to numerous conversations within Niti Aayog, many levers have been implemented with the 2022-23 timescale in mind.”
As it will be challenging to get individuals to adopt digital wallets within the timescale, “it is likely that the early use cases will focus on business-to-business and business-to-government payments,” he said.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.