Reserve Bank of India Explores the Possibility of a “Central Bank Digital Currency”

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The Reserve Bank of India is exploring the possibility of a “central bank digital currency”, as reported The Times India on April 5.

B P Kanungo, India’s Deputy Governor mentioned,

“While many central banks are still engaged in the debate, 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 RBI expressed that it is exploring the possibility of a “central bank digital currency”, since technologies such as cryptocurrencies can disrupt the financial system by enhancing its transparency and its efficiency.

This week, the Reserve Bank of India also told banks and other regulated financial entities to discontinue offering services to companies dealingĀ  in cryptocurrencies.

“Reserve Bank has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies,” expressed RBI. “In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs.”

Anthony Lewis, research director at R3, said earlier this week that he believes a blockchain central bank will be created in 2018.

Other banks such the Bank of England also mentioned that they were considering launching a central bank cryptocurrency.

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