After the Reserve Bank of India's proposal to include digital currency to expand the scope of the definition of 'bank note', Pankaj Chaudhary, the Minister of State, Ministry of Finance, informed the Lok Sabha today the government has received the RBI proposal in October 2021.
The proposal seeks to amend the Reserve Bank of India Act, 1934, to enhance the definition of 'bank note' to include currency in digital form.
His response came after the unstarred question asked by Member of Parliament Adoor Prakash whether the government has any proposal to introduce Central Bank Digital Currency (CBDC) and if any assessment was done on its implications?
The ministry said the RBI has examined use cases and worked out a phased implementation strategy to introduce CBDC with little or no disruption.
The ministry's response added the introduction of CBDC can provide significant benefits, such as reduced dependency on cash, higher seigniorage due to lower transaction costs, and reduced settlement risk.
The introduction of CBDC would also possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments option, it answered. It added that associated risks need to be carefully evaluated against the potential benefits.
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