India’s central bank is working towards a phased introduction of a digital currency and will put forth a final design after it has conducted large scale pilot projects.
(Bloomberg) — India’s central bank is working towards a phased introduction of a digital currency and will put forth a final design after it has conducted large scale pilot projects.
The Reserve Bank of India is exploring the option of implementation of an account-based central bank digital currency or CBDC for the wholesale segment and token-based currency for the retail sector, it said in a paper released on Friday. The digital currency will be referred to as the e-rupee and will provide an additional option to all the available forms of money, it said.
Cash-dependent India is joining countries including China in pushing forward with digital versions of their currencies as they look to harness new technologies to make transactions and payments more efficient. In her budget speech in February, Finance Minister Nirmala Sitharaman said the RBI would launch the digital currency this year.
“As there are multiple compelling motivations for the introduction of CBDCs, the 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. The RBI will soon kick off a limited pilot launch for the e-rupee.
Number of digital transactions have almost doubled in past three years, rising to 88.4b transaction in FY22 from 45.72b in FY20, according to the Ministry of Electronics and IT.
The “CBDC 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 RBI said.
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