Finance Minister Nirmala Sitharaman, during her Budget 2022 speech, announced setting up of India's official cryptocurrency - Digital Rupee.
Sitharaman said the Reserve Bank of India (RBI) will issue the cryptocurrency.
While delivering the Union Budget 2022 speech, the Union Financial Minister Nirmala Sitharaman said on Tuesday, “Introduction of a central bank digital currency (CBDC) will give a big boost to digital economy. Digital currency will also lead to a more efficient and cheaper currency management system. It is, therefore, proposed to introduce digital rupee using blockchain and other technology to be issued by the RBI starting 2022-23.”
CBDCs are created by the central banks in digital form. The only difference between them and fiat currencies is that the former tokens are transacted only digitally, while the latter can be exchanged digitally as well as physically.
Unlike typical cryptocurrencies which are decentralised financial tokens, CBDCs, just as fiat currencies, are backed by central reserves.
The digital rupee will be digital representation of Indian rupee backed by the Reserve Bank of India (RBI).
As a matter of fact, India is not the only country contemplating a CBDC. Even digital dollar, digital euro and e-yuan are being experimented by the central banks in different parts of the world.