India may launch digital currency trials by December
12:03, 27 August 2021
The Reserve Bank of India, the nation’s central bank, may launch first digital currency trial programs by December, governor Shaktikanta Das told CNBC-TV18 news channel today.
The central bank is evaluating the security aspects, implications on the financial sector, and impact on the monetary policy and currency circulation in the run-up to the introduction of digital currency, Das said. The central bank has been looking into the introduction of digital currency for the past year as the coronavirus pandemic triggered a fall in cash transactions and increased interest in cryptocurrencies like bitcoin.
“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally,” Das told CNBC-TV18 in a pre-recorded interview.
The central bank is considering having either a centralised ledger for the digital currency or the so-called distributed ledger technology which allows multiple participants to access, share and record transactions simultaneously.
According to a survey by the Bank of International Settlements released last month, 86% of central banks were actively researching the potential for digital currencies while 60% were experimenting with the technology and 14% were deploying pilot projects.
The advantages of issuing a central bank digital currency might be enough to justify India issuing one, Reserve Bank of India deputy governor T Rabi Sankar said on 22 July. He said countries transacting in digital currencies must have their own settlement in place.
“India is leading the world in terms of digital payments innovations. Its payment systems are available 24x7, available to both retail and wholesale customers, they are largely real-time, the cost of transaction is perhaps the lowest in the world.
"It would be difficult to find another payment system like Unified Payment Interface that allows a transaction of one Rupee. With such an impressive progress of digitisation, is there a case for CBDCs (central bank digital currencies)?” Sankar said.
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