MUMBAI: The Reserve Bank of India (RBI) will conduct rigorous pilots or “proofs of concept” to ensure the sanctity of cyber security and prevention of counterfeiting before issuing the digital rupee in the next fiscal year.
Declining to give an exact timeline on the launch, RBI Governor Shaktikanta Das on Thursday said that the central bank had to proceed very “cautiously” and couldn’t “hasten” on the issuance of the Central Bank Digital Currency, or digital rupee.
Finance minister Nirmala Sitharaman had said during this year’s Union Budget presentation that the central bank would issue the digital rupee in FY23 after an amendment in the RBI Act. Terming cryptocurrencies a “big threat” to financial and macroeconomic stability, Das said investors in cryptos should be cognisant of the risks they faced as these currencies by whatever name they went weren’t backed by an underlier, “not even a tulip.”
The flower analogy was used to draw attention to the first recorded speculative bubble which went bust in 1637 in the Dutch republic. The digital rupee that RBI is working on is like its paper currency counterpart and both are interchangeable, being issued by the central bank, which will bear liability for it as in the case of currency notes or bank notes.
A person could use the digital rupee as he uses the paper rupee issued by the central bank for making payments etc. The only difference will be instead of using a wallet to carry notes, a mobile phone or similar technology would be used to transact with digital rupee.“Global central banks are proceeding with CBDCs’ issuance with utmost care and caution and we will also do the same,” the RBI Governer said.