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Laxman Pai, Opalesque Asia: India's central bank, the Reserve Bank of India's (RBI), is planning to create an inter-departmental group tasked with analyzing the feasibility of issuing a rupee-backed central bank digital currency (CBDC). This is RBI's first take on the possible use of crypto or digital currency.
In its annual report, the RBI highlights the need to keep track of trade in virtual currencies that are turning opaque. The banking regulator fears that a crypto crackdown in India might backfire.
RBI's report noted that: "Globally the rising costs of managing fiat paper/metallic money, have led central banks around the world to explore the option of introducing fiat digital currencies".
In its Annual Report 2017-18, the central bank said: "In India, an inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency."
The bank's report says that "Developments on this front need to be monitored as some trading may shift from exchanges to peer-to-peer (P2P) mode, which may also involve increased use of cash."
The crypto does not currently pose systemic risks, said the bank, but cautioned that the cryptocurrency eco-system may affect the existing payment and settlement system which could, in turn, influence the transmission of monetary policy."
The report also highlights that "Possibilities of migration of crypto exchange hous...................... To view our full article Click here
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