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The government has no plans to introduce cryptocurrency and the Reserve Bank of India (RBI) is working towards a phased implementation strategy for introduction of Central Bank Digital Currency (CBDC), the Parliament was informed on Tuesday.

In a written reply, Minister of State (MoS) for Finance Pankaj Chaudhary said, "RBI does not issue cryptocurrency. Traditional paper currency is a legal tender and is issued by RBI in terms of provisions of RBI Act, 1994. A digital version of traditional paper currency is called CBDC."

A Deloitte report has recently said the proposed CBDC to be issued by the Reserve Bank will play a critical role in improving the speed of transactions and reducing the cost of cash.

The report said CBDCs are likely to drive efficiencies and effectiveness of a jurisdiction's payments system by ensuring that its users access safe digital money. CBDCs will provide users with a sovereign option as compared to other less safe digital instruments, which may lead to less reliable payments, relatively volatile store of value and potentially erode monetary and financial stability.

The RBI is planning to come out with a central bank-backed digital currency, using blockchain technology in 2022-23.

CBDC is a digital or virtual currency but it is not comparable to the private virtual currencies or cryptocurrency that have mushroomed over the last decade. Private virtual currencies do not represent any person's debt or liabilities as there is no issuer.

As a financial services innovation, CBDCs are likely to play a pivotal role in shaping the 'future of value transfer', the report said, adding that most central banks worldwide are now in various stages of their evaluation of launching their national digital currencies.

"CBDCs due to its inherent potential of changing the way value transfer happens, provide a more resilient, innovative, and competitive payment system for households, businesses and economies," said Monish Shah, partner, Deloitte India.

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