cbdc: There’s no plan to recognise bitcoin as currency: Govt

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NEW DELHI: The Cen­tre has not received a pro­pos­al to recog­nise bit­coin as a cur­ren­cy in India, the gov­ern­ment told Par­lia­ment on Mon­day, while adding that the Reserve Bank of India has rec­om­mend­ed widen­ing the def­i­n­i­tion of “bank note” for the launch of a Cen­tral Bank Dig­i­tal Cur­ren­cy (CBDC).
Respond­ing to a ques­tion on whether the gov­ern­ment has any pro­pos­al to recog­nise bit­coin as a cur­ren­cy, finance min­is­ter Nir­mala Sithara­man replied in the neg­a­tive in Lok Sab­ha.
The state­ment came ahead of the intro­duc­tion of a bill to “pro­hib­it” all pri­vate cryp­tocur­ren­cies, while pro­vid­ing cer­tain excep­tions to “pro­mote the under­ly­ing tech­nol­o­gy” and its uses. The pro­posed leg­is­la­tion, planned for the cur­rent ses­sion of Par­lia­ment, will also cre­ate a “facil­i­ta­tive frame­work for the cre­ation of offi­cial dig­i­tal cur­ren­cy to be issued by the RBI”, the gov­ern­ment had said last week, amid intense lob­by­ing to “reg­u­late” cryp­tocur­ren­cy, instead of ban­ning them in India. Bit­coin is the most pop­u­lar cryp­tocur­ren­cy globally. 

Those sup­port­ing the demand for reg­u­la­tion have argued that it is tough to ban cryp­tocur­ren­cy, and the entire mar­ket will move to the Dark Net if the gov­ern­ment moves ahead with the ban. The RBI has been lead­ing the demand for a ban.
While reply­ing to anoth­er ques­tion, junior min­is­ter for finance Pankaj Chaud­hary told the low­er house that in Octo­ber, the RBI sent a pro­pos­al to the gov­ern­ment to amend the law to widen the scope and def­i­n­i­tion of “bank note” to include cur­ren­cy in dig­i­tal form.
“The RBI has been exam­in­ing use of cas­es and work­ing out a phased imple­men­ta­tion strat­e­gy for intro­duc­tion of CBDC with lit­tle or no dis­rup­tion,” Chaud­hary said.
The RBI has opposed the intro­duc­tion of pri­vate cryp­tocur­ren­cy, argu­ing that it is prone to mis­use and has no under­ly­ing asset from which it derives its val­ue. Besides, it fears that pri­vate dig­i­tal cur­ren­cy will result in dol­lar­i­sa­tion of the econ­o­my and sig­nif­i­cant­ly impact its abil­i­ty to man­age mon­ey sup­ply, infla­tion, exchange rate. In con­trast, it is look­ing to start work on CBDC over the next few months.
“Intro­duc­tion of CBDC has the poten­tial to pro­vide sig­nif­i­cant ben­e­fits, such as reduced depen­den­cy on cash, high­er seignior­age due to low­er trans­ac­tion costs, reduced set­tle­ment risk. Intro­duc­tion of CBDC would also pos­si­bly lead to a more robust, effi­cient, trust­ed, reg­u­lat­ed and legal ten­der-based pay­ments option. There are also asso­ci­at­ed risks which need to be care­ful­ly eval­u­at­ed against the poten­tial ben­e­fits,” Chaud­hary said in Parliament. 



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