Canada And India Explore Central Band Digital Currency Option

Central Bank Digital Currency

Welcome back to the Tribe! In this post we take a look at Canada and India posing to create their own Central Bank Digital Currency.

Nothing should be considered investment or financial advice. Enjoy the ride!

Central Bank Digital Currency

As more countries move to regulate and integrate cryptocurrency into their financial system. Canada and India are the recent countries exploring the option of a Central Bank Digital Currency. The decision by both countries to explore this option comes despite the absence of clear regulation for cryptocurrency.

Bank of Canada to Partner With MIT For CBDC Project

In a press release, yesterday, The Bank of Canada (BoC) and the Massachusetts Institute of Technology (MIT) announced that both parties have reached an agreement to collaborate in a twelve-month research project on central bank digital currency (CBDC).

The terms of the agreement state that;

The Bank will work with the MIT Media Lab’s Digital Currency Initiative team to explore how advanced technologies could affect the potential design of a CBDC, building on the DCI’s ongoing research into CBDC. This exploration will help inform the Bank of Canada’s research effort into CBDC.

Although The Bank of Canada is working on a research project, the apex bank still maintains that it is yet to decide if it will introduce a CBDC. According to the release, The Bank of Canada said;

The project forms part of the Bank’s wider research and development agenda on digital currencies and fintech. It will focus on exploring and experimenting with potential technology approaches to determine how a CBDC could work. No decision has been made on whether to introduce a CBDC in Canada.

The Bank of Canada provided no major details in the release. But specified that it will provide an update on the findings and outcomes at the end of the project period. So if plans go as expected, we will have updates on the project in March 2023.

India Opts For CBDC That Is Digital Version Of Rupee

The Indian Finance Ministry told the parliament yesterday that it does not have a plan to issue cryptocurrency to be regulated by the central bank, the Reserve Bank of India (RBI). The government also clarified that India’s central bank digital currency (CBDC), which the RBI will launch this financial year, is “a digital version of traditional paper currency.”

Addressing questions from the parliament, Pankaj Chaudhary, the minister of state in the ministry of finance explained the difference between the proposed CBDC and crypto currency.

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 central bank digital currency (CBDC).

This move may be seen as the government warming up to Crypto, although the Finance minister announced last month that the ministry is still sitting on the fence concerning cryptocurrency.

According to the Minister;

“I am not going to legalize it or ban it at this stage. Banning or not banning will come subsequently, when consultations give me input.”

Despite their indecisiveness over crypto the government still thinks that the creation of the CBDC will revolutionize the fintech sector.

Commenting on the release of the digital Rupee, Prime minister Narendre Modi said;

“The digital rupee will revolutionize the fintech sector by creating new opportunities and lessen the burden in handling, printing, logistics management of cash.”

In the end the prime ministers statement shows that the government does not view its CBDC as a cryptocurrency but as a tool to lessen the challenge of cash management and logistics. This questions the classification of CBDC’s as cryptocurrency. Because they cannot be described as fully decentralized which is a basic feature of cryptocurrency.

Other News – Crypto Sanctions

Following the recent sanctions imposed on Russia by the West and other countries for the invasion of Ukraine. There have been fears that crypto will be used to evade the sanctions. This prompted calls from the authorities that crypto exchanges restrict the accounts of their Russian users. Despite the measures put in place by the exchanges, it seems some Russian officials and oligarchs found a way around them. But, some firms have had some success in tracking them down.