Reserve Bank of India Confirms the Launch of the Digital Rupee Pilot
The Reserve Bank of India (RBI) has announced that it will soon
commence limited pilot launches of the digital rupee for specific
use cases. The central bank explained that "multiple technological options
shall be tested and based on the outcomes, the final architecture shall be
decided."
RBI Prepares to Launch Digital Rupee Pilot
India’s central bank, the Reserve Bank of India (RBI), published
a report titled
"Concept Note on Central Bank Digital Currency" on Friday. The
51-page document explains the "objectives, choices, benefits, and risks of
issuing" a Central Bank Digital Currency (CBDC) in India. The RBI declared
that it has been exploring the pros and cons of introducing a central bank
digital currency "for some time."
The RBI has also clarified that the upcoming CBDC, which is
referred to as the e₹ (digital rupee) "is substantially not different from
banknotes, but being digital, it is likely to be easier, faster, and
cheaper." The report details:
"RBI is currently engaged in working towards a phased
implementation strategy, going step by step through various stages of pilots
followed by the final launch, and simultaneously examining use cases that could
be implemented with minimal or no disruption."
"Depending on the different use cases, multiple
technological options shall be tested, and based on the outcomes, the final
architecture shall be decided," the report adds, noting that the central
bank is "deliberating on the various aspects of technological choices
available."
Moreover, the RBI is "exploring the option of
implementation of account-based CBDC in the wholesale segment and token-based
CBDC in the retail segment via a graded approach."
The concept note also details the planned features of a digital
rupee and the RBI’s approach toward introducing a digital currency. It
discusses key considerations such as technology and design choices, issuance
mechanisms, privacy issues, and "the implications of the introduction of
CBDC on the banking system, monetary policy, and financial stability."
"CBDC, the Central Bank Digital Currency, holds a lot of
promises by way of ensuring transparency and low cost of operation, among other
benefits, and the potential to expand the existing payment systems to address
the needs of a wider category of users," the central bank concluded,
adding:
"The Reserve Bank will soon commence limited pilot launches
of e-money for specific use cases."
According to the RBI, the way forward "requires elaborate
planning in terms of scope, cost, and timelines to ensure the timely roll out
of different phases of CBDC introduction."
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