Reserve Bank of India Considers Central Bank-Issued Digital Currency

The Reserve Bank of India (RBI) has announced that it is looking into issuing its own central bank digital currency (CBDC), after a meeting of the Monetary Policy Committee (MPC), according to a Statement on Developmental and Regulatory Policies released Thursday, April 5.

RBI has established an inter-departmental group to investigate the potential advantages and feasibility of its CBDC, which will submit its findings in a report in June 2018, the statement says.

“Technological innovations, including virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system,” RBI Deputy Governor B P Kanungo told The Times Of India Thursday.

The Reserve Bank’s inquiry into a CBDC emerged even as it announced it was prohibiting all regulated entities from providing services to any users, traders or holders of cryptocurrencies, as Cointelegraph reported yesterday.

RBI’s position — pro state-issued cryptocurrency and anti decentralized cryptocurrency — represents a broader trend among international central banks as they move in to police the digital frontier.

One solution to central banks’ potential concerns like money laundering is the co-optation of Blockchain tech by the institutional behemoths themselves, as Kanungo himself emphasized yesterday:

“We recognize that the Blockchain technology has potential benefits for the financial sector and we believe that they should be encouraged to be exploited for the benefit of the economy.”

As early as 2016, the Bank of England and the People’s Bank of China explored the idea of issuing their own digital currencies, with over 90 central banks worldwide that same year investigating DLT tech. In 2017, the Bank of Canada published extensive research into the benefits of CBDCs, and already in the first months of 2018, banks in Malaysia, Taiwan, Poland, Switzerland, among others, have all made news with inquiries into the use of Blockchain systems.

Earlier this week an R3 researcher stirred a Deconomy panel in South Korea with his prediction that wholesale CBDCs would see real-world implementation in 2018.