In a concept note regarding the central bank digital currency, the Reserve Bank of India (RBI) announced that it would shortly start a pilot program for the digital rupee for particular use cases (CBDC).
The concept note from India’s central bank stated that the introduction of a wholesale and retail CBDC had advantages.
According to the paper, the RBI may implement a token-based CBDC for retail because it would be more analogous to physical cash, while it may take into account an account-based approach for wholesale.
A token-based CBDC functions similarly to a banknote in that the token denotes ownership at a particular moment.
The central bank stated that with an account-based CBDC, a kept record of transactions and balances of the asset’s history establishes ownership.
CBDC is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems,” the RBI noted in its note. “CBDC is aimed to complement, rather than replace, current forms of money.”
According to the RBI, the digital rupee will probably follow a non-interest bearing design, exactly like actual currency.
