India’s central bank, the Reserve Bank of India (RBI) has acquired to get a deep insight into the new age technology – Blockchain. The Reserve Bank of India has been in line with its global counterparts in order to explore the benefits of a central bank digital currency (CBDC) that would comprise the digital currency similar of the Indian Rupee.
The RBI has launched an inter-departmental group to identify the demand and credibility of a new age technology – blockchain based digital currency which can be used in domestic payments as said by the RBI in its Annual Report 2017-18 published on Wednesday.
The monetary regulator sees the perspective as ‘rapid changes’ in the global payment industry executed by disruptive technology with the use of private digital tokens. Due to the rising costs of managing fiat (paper/metallic) money, the use of digital assets is highly cost-effective as commented by the Central Bank.
An excerpt from the bank’s statement,
“[A]n inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency (CBDC).”
Amidst all this, the RBI will introduce the new internal unit that focuses on cryptocurrency and blockchain technology in order to identify their uses, benefits, applications, etc. The internal units are expected to be operationalized in a month or so. Besides this, the authority will also draft the policies and regulations for using decentralized cryptocurrencies like bitcoin.
The main causes of this development by the RBI comes after Venezuela introduced its first state digital currency ‘Petro’ which is considered a disputed currency backed by the country’s vast oil reserves. The Petro was different compared to digital assets used in Singapore, Thailand, China now in India, South Africa in such a way that it gets over the U.S. led financial sanctions.
The RBI’s Institute for Development & Research in Banking Technology published a white paper in January of this year explaining the blockchain technology as core infrastructure that assists a state cryptocurrency. The researchers at the Central bank eventually confirmed the authenticity saying that it is mature enough that drives the digital form of the Indian rupee.
Last year, the executive director at the RBI, authenticated the research on ‘fiat cryptocurrency’ reconciling with digital token naming ‘Lakshmi Coin’.
With the new age decentralized technology and cryptocurrencies in place, the early adopters are those come from financial services, mostly financial institutions, and banks!!