India digital currency to launch in 2022-2023, finance minster says

Two thousand rupees banknotes displayed with an Indian flag in the background.

Manish Rajput | SOPA pictures | LightRocket via Getty Images

India’s central bank will launch a digital version of the rupee in the next fiscal year, the country’s finance minister said on Tuesday.

“The introduction of a central bank’s digital currency will give a boost, a big boost to the digital economy,” Nirmala Sitharaman said as she delivered the country’s annual budget. “Digital currency will also lead to a more efficient and cheaper currency management system.”

The Reserve Bank of India introduces the digital rupee in the financial year 2022-2023, which begins on April 1st.

Sitharaman gave no details on how the digital rupee would work or what it would look like, but said it would be introduced “using blockchain and other technologies.”

Blockchain refers to the technology that was originally created with bitcoin, but the definition has since evolved as its applications have moved beyond cryptocurrencies.

India would be one of the world’s largest economies to introduce a so-called central bank digital currency (CBDC) if it sticks to its plans.

China has been working on a digital version of its yuan since 2014 and is at the forefront when it comes to launching CBDCs globally.

Over the past two years, the People’s Bank of China has conducted experiments in the form of lotteries in which digital yuan is distributed to citizens of certain cities that they can use. Recently, the central bank has sought to expand the use of the digital yuan. China has not yet launched its digital currency nationwide and yet has no timeline for doing so.

Elsewhere, Japan is looking at its own CBDC, and the US Federal Reserve last month released a study on a digital dollar but did not take a firm stand on whether it would issue one.

While India is pushing ahead with a digital rupee, it has tried to take a tougher stance on cryptocurrencies like bitcoin and is currently working on regulation for the sector.

On Tuesday, Sitharaman said that income from the transfer of virtual digital assets should be taxed at a rate of 30%.

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