India’s Digital Currency To Be Launched In FY23

The Central Bank Digital Currency (CBDC) is set to be launched this fiscal year in FY23, according to Finance Minister Nirmala Sitharaman's Budget speech on February 1. She stated that digital currency will provide a significant boost to the digital economy.

"Introduction of Central Bank Digital Currency (CBDC) will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system. It is, therefore, proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23, " Sitharaman stated in a budget document.
The idea of issuing central bank digital currency was implemented after every other country piloted the digital currency following the widespread popularity of cryptocurrencies.

According to the International Monetary Fund (IMF), nearly 100 countries are investigating CBDCs at some level. Some are researching, testing, and distributing CBDC to the public.

According to Rabi Sankar, deputy governor of the RBI, while interest in CBDCs is nearly universal, very few countries have even reached the pilot stage of launching their CBDCs. Approximately 86% of centrals were actively investigating the potential of CBDCs, 60% were experimenting with the technology, and 14% were launching pilot projects.

A central bank digital currency (CBDC) is a digital currency issued by a central bank that can be used in the same way as physical currency.

“A CBDC is the legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different,”  Sankar stated in a report.

Importantly, cryptocurrencies are private money, whereas CBDCs are government-backed currencies. The primary advantage of virtual currency is that it allows for easy recording and tracking of transactions.