Why India Plans to Bring Its Own Digital Currency: FM Nirmala Sitharaman Explains to News18

India’s very own virtual currency by the country’s central bank will be introduced soon, Union finance minister Nirmala Sitharaman said on Wednesday. In her first interview with a private news channel after Budget 2022, she told Rahul Joshi, Group Editor-in-Chief, Network18, that the Reserve Bank of India (RBI) will launch the central bank digital currency (CBDC) “sooner rather than later".

In her Budget speech on Tuesday, the finance minister announced that the RBI would launch the digital rupee using blockchain and other technologies in 2022-23. The creation of India’s very own virtual currency is aimed at boosting the digital economy. “Digital currency will also be a cheaper and a more efficient currency management system," Sitharaman said while presenting the Budget.

Revealing the future plan on digital currency, Sitharaman told News18, “Once it [digital currency] goes through Parliament, RBI will move forward to take Cabinet approval and issue the digital rupee."

The name of the central bank digital currency has not been decided yet, she said.

While the CBDC is a digital currency, it is not comparable to the private virtual currencies that have gained immense popularity in recent years. “RBI has been examining use cases and working out a phased implementation strategy for the introduction of CBDC with little or no disruption," the finance ministry earlier said.

RBI governor Shaktikanta Das has repeatedly said that the central bank is worried about cryptocurrencies and their recent craze in India as these are still unregulated assets. “Cryptocurrencies are a serious concern to RBI from a macroeconomic and financial stability standpoint," Das said earlier.

Explaining the motive behind bringing India’s own virtual currency, the finance minister told News18 that the government is planning to draw a distinction between privately generated crypto assets and digital currency.

“Private people using the blockchain create it but that cannot be the currency. Currency would be when the RBI issues it. That is why we have gone to Parliament to say we have put the proposal to say the central bank would issue a digital currency," the finance minister said.

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