The Reserve Bank of India (RBI), India’s central bank, has joined a host of other nations exploring the development and implementation of a central bank digital currency (CBDC) based on blockchain technology.
ICORating reported earlier this week that India has established a task force for analyzing cryptocurrency and blockchain technology with a mandate to “research and possibly draft rules and supervise new emerging technologies in the future.” However, in RBI’s 2017-2018 Annual Report, the central bank revealed that this working group has been constituted to “study and provide guidance on the desirability and feasibility to introduce a central bank digital currency.”
The push to explore a CBDC comes amid a previously icy attitude by the RBI and the Indian government to cryptocurrencies. RBI issued a circular on April 6 preventing banks from offering financial services to cryptocurrency-related firms, which has since been challenged in an Indian court. In the meantime, cryptocurrency exchanges operating in India have circumvented the financial services ban by allowing only crypto-to-crypto trading on their platforms.
An increasing number of central banks around the world are considering CBDCs. Venezuela became the first country to officially roll out a state-backed cryptocurrency, called the Petro, in February 2018. The Marshall Islands have announced plans to launch a state-backed CBDC by the end of 2018.