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India Pushes for Global Crypto Regulation and Advances CBDC Pilot

India's Finance Minister Nirmala Sitharaman advocates for UN-led crypto regulation and announces progress in the Central Bank Digital Currency pilot project.
Published on 2022-09-08

India Advocates for Global Crypto Regulation

India's Finance Minister, Nirmala Sitharaman, emphasized the need for a coordinated global approach to crypto regulation during a meeting with IMF Chief Kristalina Georgieva. Sitharaman urged the UN to lead these regulatory efforts, highlighting India's consistent support for synchronized global coordination on crypto assets.

CBDC Pilot Project Gains Momentum

The Reserve Bank of India (RBI) is advancing its Central Bank Digital Currency (CBDC) pilot, involving four public sector banks: State Bank of India, Punjab National Bank, Union Bank of India, and Bank of Baroda. The pilot, ahead of schedule, aims for a potential rollout later this year. RBI Deputy Governor T. Rabi Sankar noted that CBDCs could significantly reduce cross-border transaction costs and times.

Collaboration with FinTech Companies

RBI is consulting with FinTech firms, including FIS, to explore CBDC functionalities such as programmable payments and financial inclusion. FIS's Julia Demidova highlighted their ecosystem's potential to support RBI's CBDC experiments, emphasizing their technology's adaptability for both wholesale and retail transactions.

Legal and Implementation Developments

The RBI Act of 1934 was amended to facilitate the CBDC pilot. The RBI plans a phased implementation targeting both wholesale and retail segments. Finance Minister Sitharaman expressed confidence in the RBI's ability to design and launch the digital currency effectively.

Caution on Crypto Investments

Despite CBDC progress, the Indian government remains wary of crypto, with Sitharaman warning investors about its risks. This stance has led some crypto companies to relocate to more favorable regulatory environments like Dubai.

Strategic Benefits of CBDC

Sitharaman underscored the advantages of a central bank-driven digital currency, particularly for large cross-border transactions. CBDCs are expected to enhance efficiency and reduce costs in international payments, aligning with global trends in digital currency adoption.

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