Key Points

The move aims to make financial transactions faster, safer, and more transparent, while reducing paper use in the economy.

Goyal explained that the digital currency will function like traditional money, but in an electronic form. "India has also announced that we'll be coming out with a digital currency which will be backed by the Reserve Bank of India guarantee like normal currency," he said.

Comparing it to the "stable coins" introduced in the United States under the GENIUS Act, the minister stated that the new system will facilitate transactions more easily and efficiently.

He noted that the initiative will bring multiple benefits. "It will only make it easier to transact. It will also reduce the paper consumption and will be faster to transact than the banking system," Goyal said.

The system will use blockchain technology, ensuring transparency and traceability. According to the minister, this will help in curbing illegal transactions, as every digital transaction can be verified through the system.

Addressing the issue of cryptocurrencies, Goyal clarified that while India has not banned them, the government does not encourage their use. "We have not been encouraging cryptocurrency, which does not have sovereign backing or which is not backed by assets," he said, stressing the risks associated with unregulated digital assets.

He explained that privately issued cryptocurrencies, like Bitcoin, operate without any official guarantee. "There's no backend guaranteeing any value," he said.

"Suppose tomorrow there's no buyer, there's nobody to guarantee." Goyal also pointed out that the government has imposed heavy taxes on such assets. "It's a thing you can do at your own risk and cost. The government doesn't encourage or discourage. We only tax it," he stated.

The minister underlined that India's digital currency will be fundamentally different from private cryptocurrencies because it will carry the full backing of the Reserve Bank of India. This, he said, ensures security and reliability for users while maintaining the integrity of the financial system.

- ANI