Presenting the budget of 2022, Finance Minister Nirmala Sitharaman had said that the Reserve Bank (RBI) will launch a digital rupee in the next financial year. The Finance Minister said that the Digital Rupee will be the central bank digital currency, which will be launched in 2022-23.
Central Bank Digital Currency (CBDC) is a digital currency issued by RBI with a legal tender. According to RBI, it will be a currency issued by the central bank but will be different from paper or polymer.
How is it different from Physical Rupee?
Digital currency cannot be burnt or damaged. So once issued they will always be there whereas this is not the case with notes. Due to being economical, there has been a lot of interest in CBDCs around the world. However, so far only a few countries have been able to go ahead with the pilot project in this matter. CBDC is an electronic record or digital token of the official currency of any country.
Jaya Vaidhyanathan, CEO, BCT Digital said, “Unlike private cryptocurrencies which have no intrinsic value through assets backing them, the RBI’s CBDC will simply be a digital equivalent of the physical rupee, which means that the CBDC can be exchanged for a set value of rupees once it comes into circulation. This means that digital currency will be worth the same as physical money, just like a Rs 10 coin and Rs 10 note is of the same value currently.”