The two thousand rupee note is displayed with an Indian flag on the background.
Manish Rajput | SOPA images | LightRocket via Getty Images
India’s central bank will launch a digital version of the rupee next financial year, the country’s finance minister said on Tuesday.
“The introduction of a central bank digital currency will give a boost, a big boost to the digital economy,” said Nirmala Sitharaman. “Digital currencies will also lead to a more efficient and cheaper money management system.”
The Reserve Bank of India will introduce a digital rupee in the 2022-2023 financial year starting on April 1.
Sitharaman did not give details on how the digital rupee will work or what it will look like, but said it will be introduced “using blockchain and other technologies.”
Blockchain refers to technology was originally created with bitcoin, but the definition has evolved since then as its applications have extended beyond cryptocurrencies.
India will be one of the world’s largest economies to introduce a central bank digital currency (CBDC) if it follows through with its plan.
China has been working on a digital version of yuan since 2014 and go the farthest when it comes to launching CBDCs globally.
Over the past two years, the People’s Bank of China has conducted a lottery experiment in which digital yuan was given to citizens in several cities for them to spend. More recently, central banks have considered expanding the use of digital yuan. However, China has yet to launch its digital currency nationally and there is no timeline for doing so.
Elsewhere, Japan is considering its own CBDC and the US Federal Reserve last month released a study on the digital dollarbut there is no firm opinion on whether it will release.
While India is pushing for a digital rupee, it has been trying to take a tougher stance towards cryptocurrencies like bitcoin and currently working on regulation for this area.
On Tuesday, Sitharaman said income from the transfer of virtual digital assets should be taxed at 30%.
