India’s Central Bank RBI Publishes Digital Currency Details – The Reserve Bank of India (RBI) issued a report titled “Concept Note on Central Bank Digital Currency” on Friday. The RBI described the 51-page document as explaining the objectives, choices, benefits, and risks of issuing a central bank digital currency (CBDC) in India, adding that the RBI has been researching the pros and cons of introducing a central bank digital currency for some time.
The RBI clarified that the upcoming CBDC, also known as e₹ (digital rupee), is substantially similar to banknotes, but because it is digital, it is likely to be easier, faster, and cheaper. According to the report: “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.”
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“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 retail segment via a graded approach.
The concept note also describes the planned features of a digital rupee as well as the RBI’s approach to introducing digital currency. It addresses key issues such as technology and design considerations, issuance mechanisms, privacy concerns, and the implications of CBDC introduction 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₹ 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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