Budget 2022: Finance Minister Nirmala Sitharaman, while presenting the General Budget, 2022-23, announced on Tuesday that India will present its digital currency in the financial year starting from April, 2022. Digital currency will encourage more efficient and cheaper currency management system. In view of the worldwide craze for crypto or digital currencies, this step of the Government of India is being considered very important.
The RBI has been strongly opposed to private cryptocurrencies, as they can have an impact on national security and financial stability.
Regulation is yet to be finalized
The Finance Minister said that this currency named ‘Digital Rupee’ will be issued by the Reserve Bank (RBI) in digital form and it can be replaced with physical currency i.e. Rupee. The regulation governing this digital currency (CBDC) of the Central Bank is yet to be finalized.
#WATCH , Central bank will issue a digital currency, no discussions over what are Crypto & Crypto assets for now. Consultation with stakeholders is underway. The description of digital assets will come after the consultation: FM Nirmala Sitharaman pic.twitter.com/13a2eaUtWe
— ANI (@ANI) February 1, 2022
According to the budget document, “It is proposed to introduce a digital rupee using blockchain or other technologies.” Blockchain is basically a digital ledger, which records transactions that can be tracked.
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Digital economy will get encouragement
Finance Minister Nirmala Sitharaman in her budget speech said that the introduction of CBDC will give a boost to the digital economy. “A more efficient and cheaper currency management system will come into existence than digital currency. Block chain and other technologies will be used in digital currency.
PM has also raised this issue on the global forum
Principal Economic Adviser Sanjeev Sanyal said the government will take a balanced approach to the issue of regulation of cryptocurrencies as it concerns the financial stability of the country.
Recently, Prime Minister Narendra Modi had also called for a discussion on the making of such rules at the World Economic Forum.
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Capitavia Global Research said that the Reserve Bank is working on a phased plan for a central bank digital currency (CBDC). In the near future, it is possible to have a digital currency on a pilot basis for testing.
How CBDC is different from Virtual Currency
A CBDC is a digital or virtual currency, but it cannot be compared to private virtual currency or cryptocurrencies, which have grown rapidly over the past decade. Private digital currencies do not represent the liabilities of any individual as they are not an issuer. They are definitely not currency.
what is blockchain
If you understand blockchain in simple words, then it is made up of two words. The first is the block and the second is the chain. Block here refers to multiple data blocks in blockchain technology. That is, data is kept in these blocks. Here different boxes contain currency i.e. data. Having currency in different boxes creates a long chain of data here. When any new data arrives, it is recorded in a new block. When the block is filled with data it is appended to the previous block. Similarly all the blocks are connected to each other.
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How Blockchain Technology Works
Blockchain technology works in a way in the exchange process. It works on data blocks, which we mentioned above. Each block is encrypted and linked electronically to each other. This increases their safety.
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