The Reserve Bank of India announced that it’s first testing of digital currencies might begin as early as December 2021.
Shaktikanta Das, the central bank governor, stated in an interview that central bank digital currency [CBDC] has been debated for some time, but the authorities have been cautious about its extent. According to him,
“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally.”
RBI has been examining the security and financial implications of a CBDC, as well as the potential influence on the country’s monetary policy. At the moment, authorities must pick between a centralized ledger and distributed-ledger technology [DLT] for a digital currency.
DLT simultaneously captures asset transactions and associated data in various locations. While the centralized ledger is owned and maintained by a single institution, in this case, the Central Bank. When asked about an estimate of the project’s timeline, Das responded,
“By the end of the year, I believe we should be able to…perhaps… begin our first trials.” T Rabi Shankar, the RBI’s deputy governor, stated earlier this month that the central bank was developing a “phases implementable approach.” Additionally, he had stated,
“These are incredibly complex technological and business decisions that must be made. Thus, it will be tough to put a date on it (central bank digital currency), but we should be able to release a prototype in the near future, most likely by the end of this year.”
Given the governor’s confirmation of the likelihood of initiating CBDC trials, India may officially join the club of nations already working toward their separate CBDCs before the end of the year. China has set the standard, as it is the only country conducting real-world trials of its digital yuan.
Other Central Banks, on the other hand, such as the European Central Bank and the Bank of England, are still considering the deployment of a digital euro and a UK-based CBDC, respectively.
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