India is on the cusp of launching its very own digital currency, a significant development announced by Union Minister of Commerce and Industry, Piyush Goyal, during a recent roundtable in Doha, Qatar.
This pioneering initiative is set to transform financial transactions across the nation, promising a future of faster, more secure, and transparent dealings, all while minimizing the reliance on physical paper currency.
Mr. Goyal clarified that this forthcoming digital currency will mirror traditional money in its function but will exist entirely in an electronic format. He emphasized its fundamental distinction from private cryptocurrencies: “India has also announced that we’ll be coming out with a digital currency which will be backed by the Reserve Bank of India guarantee like normal currency.”
Drawing parallels with ‘stable coins’ recently introduced in the United States under the GENIUS Act, the Minister highlighted that India’s new system is designed to streamline transactions with greater ease and efficiency.
The benefits of this digital currency are manifold. “It will only make it easier to transact. It will also reduce paper consumption and will be faster to transact than the traditional banking system,” Mr. Goyal stated.
Crucially, the system will leverage advanced blockchain technology, ensuring unparalleled transparency and traceability for every transaction. This feature is expected to be instrumental in curbing illicit financial activities, as each digital exchange will be verifiable within the system.
Addressing the broader landscape of digital assets, Mr. Goyal reiterated India’s stance on cryptocurrencies. While they are not outright banned, the government actively discourages the use of those without sovereign backing or asset support, citing inherent risks associated with such unregulated digital assets.
He elaborated on the precarious nature of privately issued cryptocurrencies like Bitcoin, explaining, “There’s no backend guaranteeing any value.”
The Minister posed a pertinent question: “Suppose tomorrow there’s no buyer, there’s nobody to guarantee.” He further noted the government’s imposition of substantial taxes on these assets, clarifying, “It’s a thing you can do at your own risk and cost. The government doesn’t encourage or discourage. We only tax it.”
In essence, India’s forthcoming digital currency stands apart from private cryptocurrencies due to the unwavering and complete backing of the Reserve Bank of India. This crucial backing will provide users with a robust layer of security and reliability, thereby safeguarding the integrity and stability of the nation’s financial system.