Before the end of the year, the Reserve Bank of India may begin preliminary central bank digital currency (CBDC) experiments.
Central bank is “extremely cautious”
RBI governor Shaktikanta Das told CNBC that the central bank is “extremely cautious” in managing a future digital rupee even as its counterparts worldwide experiment with their sovereign digital currencies.
The RBI is focusing on analysing the possible impact of a digital currency on India’s financial sector. Additionally, with concerns including monetary policy control high on the agenda.
On the technical side, the RBI governor stated that the central bank was debating whether to use a centralised or decentralised ledger for the CBDC.
“I think by the end of the year, we should be able to […] We would be in a position, possibly to start our first trials,” Das said when asked about the project’s next step.
The RBI governor’s statements echo those made by other central bank officials recently. These statements concerning the status of the proposed digital rupee initiative.
Moreover, in July, the RBI deputy governor indicated that the central bank was leaning toward a phased deployment plan for its CBDC.
The Onset of National Digital Currencies
Additionally, several central banks are creating their national digital currencies in response to global financial entities. These include the Bank for International Settlements advocating for CBDCs to counter cryptocurrencies and private stablecoins.
According to the Atlantic Council in July, nations accounting for 90% of global GDP explore CBDC in various phases.
China continues to lead the CBDC race among major global economies. China, along with their several experimental projects to encourage the adoption of the e-yuan. Other Asian governments are likewise going forward with their ambitions for digital currencies.
Additionally, regional digital currency projects are springing up in regions like Asia and the Caribbean. Therefore, highlighting the need for international collaboration in the CBDC arena.