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Reserve Bank of India official suggests country may soon have a digital currency pilot

CBDC would be released in phases to prevent volatility

India may be launching a digital currency, an official from the Reserve Bank of India (RBI) said today.

Speaking at a panel discussion held by the Vidhi Centre for Legal Policy think tank, RBI deputy governor T Rabi Shankar described the potential Central Bank Digital Currencies (CBDCs) have for India, including smoother international transactions and protections from volatility.

Addressing whether CBDCs are needed in India, Shankar said: "It is important that all central banks get on the CBDC arrangements and coordinate effectively within themselves to actually maximize the immense potentials that CBDCs carry."

Shankar acknowledged that any monetary system change on such a large scale should happen "at a rate slow enough for the system to adapt efficiently."

The deputy governor said the RBI had studied specific-purpose CBDCs for wholesale and retail segments and was considering launching a general-purpose, population-scale currency.

"RBI is currently working towards a phased implementation strategy and examining use cases which could be implemented with little or no disruption," said Shankar.

The deputy governor said which segments use the currency, the underlying tech, whether the ledger is centralised or distributed, distribution architecture, who issues the currency, and the degree of anonymity were all issues being considered.

Shankar added:

Pilots in wholesale and retail segments may be a possibility in the near future.

India signalled its intention to create a digital currency back in February. If it were to trial the currency, it would join countries like Japan, which is currently engaging in a year-long feasibility study.

Hong Kong is also exploring digital currency, and Singapore appears to be crowdsourcing its own.

China looks to be the leader of the pack when it comes to digital currency. Last week the Middle Kingdom said its digital yuan trial had reached ¥34.5bn ($5.3bn) in transaction value. ®

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