The government is mulling over the idea of printing digital money or virtual money. The Reserve Bank of India is toying with the idea of introducing a fiat digital currency, like many other central banks around the world. These will be issued by the central bank and considered the liability of the central bank. Once introduced they will be in circulation in addition to the paper currency.
Currently, virtual currencies or cryptocurrencies like bitcoin, ethereum and ripple are unregulated and governments around the world are trying to curb their use. The meteoric rise in the value of bitcoin in 2017, the most popular cryptocurrency, triggered worries that such currencies could facilitate everything from money laundering to tax evasion and fraud.
The RBI on Thursday barred banks and financial institutions from dealing in crypto-currencies. It said it had decided to ring-fence RBI-regulated entities from the risk of dealing with entities associated with virtual currencies.
The RBI has constituted an interdepartmental committee that will submit a report on the desirability and feasibility of a fiat digital currency. The committee will submit its report by June-end.