The Reserve Bank of India has released a report on CBDC.

The central bank of India seeks to raise awareness of CBDCs, which are being developed by many central banks around the world, and to clearly define the objectives, as well as the potential positive and negative aspects of the digital rupee launch.

The bank's document summarizes the key motivations for the issuance of India's CBDC project, emphasizing trust, security, liquidity, also finality and integrity of settlement as key elements of a sovereign digital currency.

The main motivation for issuing CBDCs in India is to reduce the operational costs associated with cash management in the country. In addition to an increasingly resilient, efficient and innovative payment system, the bank is also touting the improved financial inclusion that CBDC can guarantee. Improvements in the cross-border payment and settlement system may add to this.

Cryptocurrencies are evil!

However, the document also includes the bank's view that cryptocurrencies pose a significant risk to Indian consumers due to volatility.

“These digital assets undermine India's financial and macroeconomic stability due to their negative impact on the financial sector” — they wrote.

The central bank also highlighted its concern that the continued proliferation of cryptocurrencies will reduce its ability to regulate monetary policy and the monetary system, which it considers a threat to financial stability in India.

The digital rupee is advertised as having the same benefits as cryptocurrencies, while “providing consumer protection” by avoiding what was described as “harmful social and economic consequences.”

The memo went on to outline the differences between retail and wholesale CBDC, with the former model serving the public sector while the latter serves financial institutions. The authorities suggested that it may make sense to introduce both forms into the Indian market.

India's central bank has also raised the possibility of direct and indirect issuance and management of CBDCs. In the case of direct issuance, the bank would be responsible for managing the entire system, while the indirect model would require the use of intermediaries such as banks and other payment service providers.

Translated and published with permission fromhttps://bitcoin.pl/cbdc-indii-raport