RBI sets up panel to design Rupee-based digital currency

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Reserve Bank of IndiaThe Reserve Bank of India (RBI) has formed a new departmental to analyse the feasibility of launching its own Rupee-based Digital currency.

As per the industry sources, the proposed Digital or Virtual Currency (VC) will be Rupee-based which could replace paper or metal-based currency currently in circulation, said the RBI’s Annual Report 2017-18.

The regulator also launched a new unit to oversee the developments pertaining to emerging technologies such as cryptocurrency, blockchain and Artificial Intelligence (AI).

 “In India, an inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency,” said RBI in the report.

Earlier, the central bank was mulling over the launch of cryptocurrency called ‘Lakshmi’, based on the results of examination done by group of experts at RBI for the possibility of cryptocurrency as an alternative to the Indian rupee for digital transactions.

If launched, Lakshmi would be a fiat-cryptocurrency and unlike bitcoin . ‘Fiat currency’ is a currency that is forced into circulation by a government.

In the latest Annual report, the apex body has also cited the increasing costs of managing paper or metallic currency as the catalyst behind the launch of digital currency.

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