The bank's governor said a pilot of a crypto version of the national currency would begin by December. Central bank digital currencies are online versions of a country's physical currency. China, Britain and the European Union are also exploring the idea.
Published on calcalist.co.il at 18:10 | 27/08The Reserve Bank of India (RBI) may launch its first digital currency pilot this December, governor Shaktikanta Das said, according to CNBC. Central banks in China, Europe and Britain are exploring issuing digital currencies, either to commercial banks or directly to the public.
These currencies, known as central bank digital currencies, or CBDCs, are legal tender in digital form—essentially online versions of their countries' physical currencies. In India's case, this would be a digital rupee. "We are being extremely careful about it because it is a completely new product, not just for the Reserve Bank of India but for the whole world," Das said yesterday. According to Das, the RBI is examining various aspects of the product, including its security, its impact on India's financial sector, and how it would affect monetary policy and currency in circulation.
Das added that the central bank is also weighing a centralized ledger for digital currencies against distributed ledger technology (DLT). DLT is a digital database that allows multiple participants to access, share and record transactions simultaneously. A centralized ledger means the database is owned and managed by a single entity—in this case, the central bank. "I think we will be able to begin our first trials by the end of the year," Das said. His deputy, T. Rabi Sankar, said last month that the bank was working on a "phased implementation strategy" for the digital currency.
Central banks have paid increasing attention to digital currencies over the past year, following a decline in cash use and growing interest in cryptocurrencies such as Bitcoin. The People's Bank of China currently leads the field, running trials in several cities across the country. The European Central Bank and the Bank of England are also exploring a digital euro and a British CBDC. CBDCs differ from cryptocurrencies in several ways. First, they are fully regulated by a central authority. Second, rather than being tradable assets with highly volatile prices, central bank currencies would function more like their physical counterparts and be more readily accepted.