New Delhi: The Reserve Bank of India (RBI) said on Friday that the first-ever testing for the digital rupee in India might begin as early as December 2021. The digital currency, known as central bank digital currencies (CBDC), will be a legal tender in the online form, as well as an online replica of the fiat money in circulation.
Governor of the Reserve Bank of India (RBI) Shaktikanta Das told the media that the RBI is being exceedingly cautious because it is an entirely new product. ‘We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally,’ Das said.
The RBI Governor also stated that the central bank is investigating numerous elements of digital money, including its security, monetary policy implications and cash in circulation. ‘I think by the end of the year, we should be able to — we would be in a position, perhaps — to start our first trials,’ he added.
The Reserve Bank of India (RBI) is also working on a phased implementation approach for the digital currency, according to Das. It should be mentioned that central bank digital currencies or CBDCs, are digital or virtual currencies that are essentially the digital equivalent (in electronic form) of fiat currencies, such as the rupee in India.
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T. Rabi Sankar, the RBI’s Deputy Governor, said last month that the central bank is working on a phased rollout approach for a central bank digital currency (CBDC) and is evaluating use cases to guarantee minimal disruption. ‘They are not commodities or claims on commodities as they have no intrinsic value; some claims that they are akin to gold clearly seem opportunistic,’ he said.
Das also stated that the RBI is debating whether to use a centralised ledger for the digital currency or a digital database with numerous participants – commonly known as distributed ledger technology (DLT) – for the digital currency.
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