G20 leaders agree to discuss adoption, implications of CBDCs

Titled 'Bharat: Mother of Democracy', the exhibition displays texts and images from ancient scriptures while portraying them on digital panels.

The leaders of the group of the world’s biggest 20 economies, gathered in New Delhi for the annual summit, have agreed to discuss the implications of adoption of central bank digital currencies (CBDCs).

"We welcome discussions on the potential macro-financial implications arising from the introduction and adoption of Central Bank Digital Currencies (CBDCs), notably on cross-border payments as well as on the international monetary and financial system," a G20 declaration paper has said.

The leaders welcomed the BIS Innovation Hub (BISIH) Report on Lessons Learnt on CBDCs.

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"Look forward to the IMF Report on Potential macro-financial implications of widespread adoption of CBDCs to advance the discussion on this issue," the declaration paper said.

The introduction of CBDC was announced in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman and necessary amendments to the relevant section of the RBI Act, 1934, were made with the passage of the Finance Bill 2022.

The RBI picked up nine banks -- State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, YES Bank, IDFC First Bank and HSBC -- for its pilot project for wholesale CBDC.

Besides, the central bank has already rolled out a pilot in the retail version of the CBDC on December 1, 2022. The e- rupee is in the form of a digital token that represents legal tender.

On July 11, 2023, the Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar on July 11 said the central bank is targetting one million Central Bank Digital Currency (CBDC) transactions per day by end of this year.

Sankar further said this will help the central bank to study and understand the functioning of CBDC and its impact on the economy.

Dinesh Khara, MD & CEO of India's largest public sector bank State Bank of India (SBI) said the scope of the digital rupee is under close watch since the CBDC was rolled out.

"The scope can be further enlarged by including financial institutions such as mutual funds or insurance services, when they actively participate in settlements of government securities (G-Sec) or state developmental loans, " Khara said at the Financial Inclusion and FinTech Summit organised by the Confederation of Indian Industries (CII) on July 19.