ECB announces future plans on digital currency following RBI’s decision

European Central Bank President Christine Lagarde on Wednesday stated in a Bloomberg TV interview that ECB could launch a digital currency around the mid of this decade after getting a green light this summer from her fellow policymakers. 

“We need to make sure that we do it right – we owe it to the Europeans,” she said.

A month ago, Reserve Bank of India (RBI) Governor Shaktikanta Das had said the RBI has reservations regarding cryptocurrencies, and it is working on its own digital currency. He added that it will be different from the cryptocurrencies already available in the market. 

RBI’s outlook is aligned with the Indian government, which has divulged that it will bring a new bill on cryptocurrencies — The Cryptocurrency and Regulations of Official Digital Currency Bill, 2021. 

“RBI is working on a central bank digital currency, which is far different from (other) cryptocurrencies. We don’t want to be left behind in the technological revolution. We need to capitalise on the benefits of blockchain technology. We’ve certain concerns regarding cryptocurrencies,” Das had said earlier. 

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RBI’s private blockchain platform will be similar to the Unified Payments Interface (UPI), on which the government and private companies can build their own apps. However, the process is still an ongoing discussion, and the final decision to start the work on it hasn’t been taken yet. 

Further, the central bank wants to have unshortened control over the aforementioned digital currency. A leading publication quotes another source saying, “RBI didn’t want a distributed ledger like bitcoin, which uses public blockchain. RBI is essentially interested in possibilities and applications in fraud prevention, counterfeiting, and some of the specific benefits of blockchain.”  

RBI virtually banned cryptocurrency trading in 2018. However, the Supreme Court of India asked the government to come up with cryptocurrency regulation policies in 2019. In 2020, the apex court prostrated the curbs imposed by the RBI on cryptocurrency trade in India. 

In January 2021, the government called for banning private virtual currencies. It is expected to propose a bill to give cryptocurrency holders up to six months to liquidate their assets before the penalties kick in.

Besides, China — one of the leaders in developing a national digital currency — is working on digital Yuan, a central bank digital currency (CBDC), which aims to replace some of the cash in circulation.