A central bank-issued digital currency won’t be coming from India anytime soon.
The Reserve Bank of India (RBI), the country’s central bank, has decided not to pursue a central bank-issued digital currency (CBDC) at this time, according to a January 1 BusinessLine report. The RBI’s loss of interest comes months after the bank had flirted with the idea of a CBDC.
In April, the RBI said it had created a working group to “study and provide guidance on the desirability and feasibility” of a CBDC. This working group was referenced in the bank’s 2017–2018 annual report, which was published this past summer, but the group’s findings have not been made public. Rather, the annual report provided general observations from the bank regarding cryptocurrency usage, including that cryptocurrencies are “highly volatile and, therefore, not a reliable medium of exchange or store of value.”
While some countries, such as Sweden and Norway, have expressed interest in adopting a CBDC, other countries have outrightly said they would not consider one. In June 2018, for example, South Korea said no to a CBDC, citing risks associated with liquidity and credit.
A month later, in July, chair Jerome Powell of the US Federal Reserve indicated that the country’s federal banking system was not considering a CBDC either. However, like in India, some see mixed signals out of the US, as former Fed governor Kevin Warsh said – only a couple of months earlier in May – that he would have allocated resources “to think about the Fed creating Fedcoin,” which is the tentative name given to the US-based CBDC.
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