India’s central bank will launch a digital rupee pilot
According to a 50-page paper published on Friday, the Reserve Bank of India (RBI) is moving toward launching a digital rupee pilot and identifying essential aspects of the central bank digital currency (CBDC).
The Indian central bank said it will begin a pilot program for the Digital Rupee “soon” and will provide updates on its capabilities and advantages “sometimes.” Nonetheless, several crucial characteristics have been discreetly exposed.
The paper differentiates between retail and wholesale use cases, for customers and bank-to-bank transactions, and proposes implementing both.
It also considers different issuance models, including one in which a wholesale CBDC would be account-based and issued by the central bank, but a CBDC for consumers would be token-based and administered by an intermediary.
In addition, RBI requires “sufficient anonymity for small-value transactions” to adhere to a non-interest-bearing coin resembling actual currency.
The digital rupee’s underlying technology is not yet fixed in stone. The RBI leaves the door open for future adaptation to decentralized technologies.
The paper investigates several alternatives and attempts to promote awareness of CBDCs, citing “compelling arguments” that make a national digital currency “attractive, if not more so, than cash.” However, the concept note is also risk-aware and attempts to implement the pilot program gradually.