Governor of the Reserve Bank of India (RBI), Shaktikanta Das, highlighted the need for a cautious approach to the implementation of digital rupee during his inaugural address at the RBI Global Conference on Digital Public Infrastructure and emerging technologies on August 26th.
India’s CBDC Pilot Project
Since the launch of digital rupee pilots in late 2022, India has seen notable progress. The country has 5 million retail CBDC users and enlisting 16 banks in the initiative. The RBI’s CBDC pilots encompass both retail and wholesale segments, with the retail pilot initially focused on payments. India is currently testing both offline and programmability functionalities of its retail CBDC, which is crucial for ensuring a robust and versatile digital currency.
CBDC Prospects and Features
The RBI governor expressed confidence in CBDC’s potential to revolutionize payment systems, both domestically and internationally. One example he provided was the programmability feature of CBDC, which could ensure the delivery of funds to targeted users. For instance, tenant farmers, who often struggle to access agricultural credit due to the lack of land titles, could benefit from CBDC’s ability to establish identity and generate carbon credits, thereby improving their access to essential financial services. In addition to programmability, Das mentioned other potential features of CBDC, such as anonymity and offline availability, which are proposed to be introduced gradually. These features are seen as critical in making the digital rupee more accessible and versatile, especially in regions with limited internet connectivity.
Conclusion
Shaktikanta Das emphasized that while India is committed to exploring CBDC’s potential, there is no need to rush the process. He pointed out that a comprehensive understanding of the CBDC’s impact on users, monetary policy, the financial system, and the broader economy is essential before any full-scale implementation. Das stated that such understanding would emerge from the generation of user data in pilots, and the actual introduction of CBDC can be phased in gradually.
India continues to move cautiously forward with the implementation of digital rupee, aiming for a thorough study of its potential and impact on various segments of the economy.
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