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Proceed Cautiously with the Digital Rupee
Launching a central bank digital currency should be the prerogative of the Reserve Bank of India.
The finance minister sprang a big surprise in the budget speech by announcing that the Reserve Bank of India (RBI) would launch a digital rupee in 2022–23 using blockchain and other technologies. She claimed that this will help boost the digital economy and also ensure a cheaper and more efficient currency management system. However, such a quick launch of a digital rupee, which will be India’s central bank digital currency (CBDC), is not going to be an easy task.
Although around four-fifths of the central banks across the globe are working on CBDCs, only a few economies have launched one so far. In China, the digital yuan is still a work in progress. The European Union may take a couple of years to launch a CBDC. In the United States, it is only a few weeks since the Federal Reserve System has brought out a paper to explore the implications and options for using a CBDC, and it is still undecided about its desirability.
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