The Reserve Bank of India (RBI) is finalizing plans to begin a pilot phase leading to the issuance of the central bank’s digital currency, the ‘Digital Rupee’.
RBI release The October 7 concept paper outlined the motivations, design choices, and technical considerations for the pilot phase of the CBDC project.
The RBI said the digital rupee will be designed to complement rather than replace India’s existing payment system. Digital rupees are no different from banknotes, but optimized for faster and cheaper payments.
The country’s apex bank said the issuance of the digital rupee will help the Indian economy reduce operational costs associated with physical cash management, improve payment settlement efficiency and foster innovation in cross-border payments. explained.
RBI envisions that the CBDC’s forthcoming offline capabilities will make it easier for more people in remote areas with limited internet access to access financial services.
The RBI added that the CBDC will allow ordinary people to enjoy the full benefits of private cryptocurrencies without compromising the financial stability of the Indian economy.
“It is the central bank’s responsibility to provide citizens with a risk-free CBDC that offers users the same experience of working with currencies in digital form, without the risks associated with private cryptocurrencies.”
For design details, RBI plans to issue both retail and wholesale CBDCs. The wholesale CBDC is for interbank transfers and the retail version is for everyday consumer use.
Given that retail CBDCs are the digital equivalent of cash, we said that RBI can be issued on a token basis, whereas wholesale CBDCs are issued on an account basis.
RBI has not yet chosen whether to issue the CBDC on a centralized database or distributed ledger technology. However, we are learning towards options that offer stronger cybersecurity, resilience, technical stability, and governance standards.
RBI said it will incorporate the results of the pilot phase into the final design of the digital rupee.
