Negotiations on digital currency with Reserve Bank underway, final decision after consultations: Sitharaman

Finance Minister Nirmala Sitharaman said on Monday that talks are on with the Reserve Bank on digital currency and any decision in this regard will be taken after deliberation.

The Finance Minister had said in his budget speech on February 1 that the Reserve Bank would issue a digital rupee or a central bank digital currency (CBDC) in the new financial year. He had also announced a 30 per cent tax on gains from other digital assets from April 1.

The Finance Minister told reporters after addressing the meeting of the central board of directors of the Reserve Bank that the central bank and the government are together on digital currency.

He said that talks with the Reserve Bank on CBDC were going on before the budget and it is still going on.

RBI Governor Shaktikanta Das said that like many other issues, talks are going on internally between the central bank and the government on this issue.

He said that whatever are the points regarding this, we have discussed them with the government.

CBDC, though a digital currency, cannot be compared to other private digital currencies or cryptocurrencies that have gained a foothold in the recent decade. Private digit currency does not represent the debt or liability of an individual. It’s not money, definitely not currency.

Last week, Das said the central bank was in no rush and was reviewing all aspects related to CBDCs.

The Reserve Bank’s Trends and Progress of Banking in India report, released in December last year, had said that considering the impact of CBDCs on macroeconomic policy making, there is a need to adopt a basic model initially. The report said that it needed extensive testing so that its impact on monetary policy and the banking system was minimal.