On Friday, October 7, the central bank of India announced that it will start working on a Central Bank Digital Currency (CBDC) to reduce or eliminate the perceived threat of cryptocurrencies. The financial body had initially hinted at this in the budget speech it made in February, where it also mentioned a 30% tax on crypto activities.
After development, there will be two types of Indian CBDCs. Retail CBDCs will be for electronic transactions between individuals, while wholesale CBDCs are meant for transactions between institutions.
Even though the concept is now official, it is still under development and will pass through various phases before going live. It is currently in the research phase. After that, the RBI (Reserve Bank of India) will build a prototype and stress-test it extensively before evaluating the results to determine if it is safe to launch.
During India’s budget speech in February, the Indian Finance minister proposed that the project will be completed sometime in 2022 or 2023. However, considering how long it has taken other countries to develop such, the RBI’s plan may still take many years before completion.
For example, China first announced intentions to launch a CBDC in 2016. It is now 2022 and this project is still in its early stages. The same is true for other countries that have shown interest in digital versions of their currencies, like Canada, France, the US, etc.
Of the over 120 CBDC projects listed on cbdctracker, only two - Jamaica and the Bahamas - have successfully launched. 12 are in the pilot stage while 19 are in the proof of concept phase.
