The Indian government has announced the upcoming launch of the country’s central bank digital currency. The digital rupee will be issued by the Reserve Bank of India (RBI) in the financial year 2022-23, Indian Finance Minister Nirmala Sitharaman said during her budget speech.
RBI’s Digital Currency, the Digital Rupee, Coming Soon
India’s finance minister, Nirmala Sitharaman, announced Tuesday while presenting the federal budget 2022 in Parliament that the Reserve Bank of India (RBI) will issue a central bank digital currency (CBDC) in the new financial year.
Noting that the “Introduction of central bank digital currency (CBDC) will give a big boost to the digital economy” and “Digital currency will also lead to a more efficient and cheaper currency management system,” She said:
It is, therefore, proposed to introduce digital rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23.
Following the finance minister’s announcement, Union Commerce and Industry Minister Piyush Goyal explained to ANI publication:
The digital currency issued by the Reserve Bank of India will be the official and legal tender. RBI will issue this official digital currency so that India does not lag behind as new technologies like blockchain and others that are evolving in the world.
He continued: “The government does not recognize private cryptocurrencies as legal tender. If people keep those as assets they can but there will be a 30% tax on them.” The Indian government refers to all non-RBI-issued cryptocurrencies, including bitcoin and ether, as “private” cryptocurrencies.
During her budget speech Tuesday, the finance minister also proposed taxing income from cryptocurrency transactions at 30%. She also noted that “No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition.”
A growing number of central banks worldwide are exploring central bank digital currencies. According to the Atlantic Council’s central bank digital currency tracker, 87 countries are now working on a CBDC.
India will become one of the world’s largest economies to introduce a CBDC if the digital rupee is launched this coming financial year.
Meanwhile, China has been trialing its digital yuan over the past two years. The People’s Bank of China (PBOC) said in January that its central bank digital currency now has over 261 million unique users. In addition, transactions worth almost $14 billion have been made using the digital yuan and more than 8 million merchants now accept e-CNY.
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