NEW DELHI: The first-ever trials for digital rupee in India may be launched by December 2021, Reserve Bank of India (RBI) Governor Shaktikanta Das has said. The CBDC is being explored for retail and international trade payments and currently several aspects are being examined including the security of digital currency, its impact on monetary policy and the cash in circulation.
“...By December or so, we should be able to start some kind of pilot exercise. We are being extremely careful about it because it’s a completely new product, not just for RBI but globally,” Das said while speaking to a news channel.
Also referred to as central bank digital currencies (CBDC), the digital currency is proposed to be a legal tender in online form. In other words, the digital rupee will be the online version of the fiat currency available to the general public but it is not comparable to the private virtual currencies that have mushroomed over the last decade.
Das further noted that the central bank is contemplating the choice between using a centralised ledger for the digital currency and having a digital database with access to multiple participants — also known as distributed ledger technology (DLT). In the case of a centralised ledger, the database would be owned and operated only by the RBI.
Countries like the UK, Russia, Japan and China are already exploring the use of digital currencies. According to a 2021 BIS survey, quoted in the RBI report, 86% of the central banks surveyed are actively researching the potential for CBDCs, 60% were experimenting with the technology and 14% were deploying pilot projects. In October 2020, the Bahamas launched the world’s first state-backed digital token.