India’s central bank, the Reserve Bank of India (RBI), has announced that it will soon launch a “limited pilot” for a specific use case for the country’s digital currency (digital rupee). The central bank explained that “multiple technical options shall be tested and based on the results, the final architecture shall be determined.”
RBI is preparing to launch a digital rupee pilot
India’s central bank, the Reserve Bank of India (RBI), on Friday released areporttitled “Concept Note on Central Bank Digital Currency,” a 51-page document that explains the “objectives, options, issuance benefits, and risks,” and adds that the RBI has been studying 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 “virtually the same as paper currency, but is likely to be easier, faster, and cheaper because it is digital.” The report details that.
RBI is currently working toward a phased implementation strategy, with various phases of pilot operations followed by a final launch, while simultaneously looking at use cases that can be implemented with minimal disruption.
“Depending on the different use cases, multiple technical options shall be tested and the final architecture shall be determined based on the results.” The report adds that the central bank is “deliberating on various aspects of the technical options available.”
It further states that the RBI is “considering the option of implementing account-based CBDC in the wholesale segment and token-based CBDC in the retail segment in a phased approach.”
The concept note also details the planned features of the digital rupee and RBI’s approach to introducing digital currency. It discusses key considerations such as technology and design choices, issuance mechanisms, privacy issues, and “the impact of CBDC implementation on the banking system, monetary policy, and financial stability.”
“CBDC, the central bank’s digital currency, holds much promise through, among other benefits, transparency and low operational costs, and has the potential to extend existing payment systems to meet the needs of a broader category of users.” The central bank concluded, adding that.
The Reserve Bank will soon launch a limited pilot of e₹ for specific use cases.
According to RBI, the way forward “requires careful planning in terms of scope, cost and timelines to ensure timely deployment of various stages of CBDC implementation.”
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