The Central Bank of India, the Reserve Bank of India, will soon begin the rollout of its CBDC, which is the Central Bank’s digital currency for specific use cases.
The Reserve Bank of India has stated that there could be “multiple technology options to be tested and based on the results, the final architecture will be decided”.
Recently, the Central Bank of India released a report called “Concept Note on Central Bank Digital Currency”.
It was a 51-page document that discussed and elaborated on the objectives, options, benefits and risks of issuing a central bank digital currency (CBDC) in India.
India has been researching the pros and cons of introducing a CBDC for a long time.
The Reserve Bank of India has further clarified that the digital rupee is “not substantially different from bank notes, but being digital is likely to be easier, faster and cheaper.”
The report says,
RBI is currently working towards a phased implementation strategy, phasing through various pilot stages followed by the final release and simultaneously examining use cases that could be implemented with minimal or no disruption.
CBDC and phased implementation
CBDC will depend on different use cases and many other technology options. These technology options should be tested and also based on many results.
The final architecture is still to be finalized, according to reports. The central bank is also “deliberating on the various aspects of the available technology options”.
The digital currency will be introduced in a phased manner with appropriately phased out strategies. This means that the launch will be phased through several stages of pilots, after which there will be a final launch.
Along with this, there will be concurrent use cases that can be implemented with minimal or no disruption.
Other RBI Schemes
The Reserve Bank of India has also been exploring the idea of ”implementation of account-based CBDC in the wholesale segment and token-based CBDC in the retail segment through a phased approach.” as another option.
The concept note also includes the envisaged features of the CBDC and the RBI’s approach to introducing a digital currency.
The memo also includes key considerations such as technology and even design choices, emission mechanisms, and privacy issues.
It also discusses “the implications of the introduction of CBDC in the banking system, monetary policy, [and] financial stability”.
“CBDC, the central bank’s digital currency, holds great promise for ensuring transparency and low cost of operation, among other benefits, and the potential to expand existing payment systems to serve the needs of a wider category of users”.
The Central Bank also said so
According to India’s central bank, moving forward “requires elaborate planning in terms of scope, cost and timelines to ensure the timely rollout of the various phases of CBDC introduction.”
Featured image from Reuters, chart from TradingView.com
