The Reserve Bank of India said in a concept paper released on Friday that it will soon begin limited pilot launches of a central bank-backed digital rupee for specific use cases.
The RBI has been studying the pros and cons of a central bank digital currency for some time and is working on a phased implementation strategy, according to the statement.
The RBI added that use cases for an e-rupee are being examined in such a way that there is minimal or no disruption to the financial system.
The Indian government announced in February that a digital rupee would be introduced during the current fiscal year.
As cryptocurrencies gained popularity, the debate over a central bank-led digital currency gained traction in a number of countries.
"It is the responsibility of central bank to provide its citizens with a risk free central bank digital money which will provide the users the same experience of dealing in currency in digital form, without any risks associated with private cryptocurrencies," the RBI said.
The bank also stated that it may consider both retail and wholesale digital currency, claiming that both have merit.
According to the RBI, a digital currency in its wholesale form could make settlement systems more efficient and secure, whereas a retail e-rupee would provide citizens with a safer means of digital payment.
Because the digital rupee aims to mimic the characteristics of cash, it will not pay interest, unlike bank deposits. The RBI also stated that it would provide "reasonable anonymity for small value transactions akin to anonymity associated with physical cash."
Because they are comparable to cash, the RBI may consider a "token-based" retail central bank digital currency (CBDC), whereas a wholesale CBDC may be "account-based."
The RBI also stated that the e-rupee could be issued through banks as intermediaries. The central bank also stated that it is open to new technological options.
According to the concept paper, the results of the pilot projects will be incorporated into the final design.
"A CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems," the bank said.
(Source:www.scroll.in)
The RBI has been studying the pros and cons of a central bank digital currency for some time and is working on a phased implementation strategy, according to the statement.
The RBI added that use cases for an e-rupee are being examined in such a way that there is minimal or no disruption to the financial system.
The Indian government announced in February that a digital rupee would be introduced during the current fiscal year.
As cryptocurrencies gained popularity, the debate over a central bank-led digital currency gained traction in a number of countries.
"It is the responsibility of central bank to provide its citizens with a risk free central bank digital money which will provide the users the same experience of dealing in currency in digital form, without any risks associated with private cryptocurrencies," the RBI said.
The bank also stated that it may consider both retail and wholesale digital currency, claiming that both have merit.
According to the RBI, a digital currency in its wholesale form could make settlement systems more efficient and secure, whereas a retail e-rupee would provide citizens with a safer means of digital payment.
Because the digital rupee aims to mimic the characteristics of cash, it will not pay interest, unlike bank deposits. The RBI also stated that it would provide "reasonable anonymity for small value transactions akin to anonymity associated with physical cash."
Because they are comparable to cash, the RBI may consider a "token-based" retail central bank digital currency (CBDC), whereas a wholesale CBDC may be "account-based."
The RBI also stated that the e-rupee could be issued through banks as intermediaries. The central bank also stated that it is open to new technological options.
According to the concept paper, the results of the pilot projects will be incorporated into the final design.
"A CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems," the bank said.
(Source:www.scroll.in)
