In February Payments Cards & Mobile reported India’s central bank says it will launch a digital rupee CBDC in the next financial year, according to the country’s finance minister.
“Introduction of a central bank digital currency (CBDC) will give a boost, a big boost to the digital economy,” Nirmala Sitharaman said at the time, as she delivered the country’s annual budget.
“Digital currency will also lead to a more efficient and cheaper currency management system.”
Now, the Reserve Bank of India (RBI), has reportedly asked four banks to pilot the country’s central bank digital currency (CBDC) ahead of its public launch.
RBI to pilot digital rupee CBDC with public-sector banks
The RBI has reportedly asked four public-sector banks to trial India’s central bank digital currency (CBDC), one of the officials was quoted as saying: “The RBI has asked State Bank of India, Punjab National Bank, Union Bank of India, and Bank of Baroda to run the pilot internally.”
“There is a pilot on CBDCs,” another senior public-sector bank official confirmed. “The RBI may come with the launch this year. When it will exactly roll out the product and specifications is to be seen.”
The RBI is also reportedly consulting with several FinTech companies on the digital rupee. Among them is the FIS, which has been advising central banks on CBDC issues, such as offline and programmable payments, financial inclusion, and cross-border CBDC payments.
“FIS has had various engagements with the RBI … Our connected ecosystem could be extended to the RBI to experiment with various CBDC options,” said Julia Demidova, senior director, FIS.
“The digital rupee will be the digital form of our physical rupee and will be regulated by the RBI. This will be such a system that will enable an exchange of physical currency with digital currency,” Indian Prime Minister Narendra Modi previously explained.
Meanwhile, the RBI is advocating for a ban on all cryptocurrencies such as bitcoin and ether. RBI Deputy Governor T. Rabi Sankar said earlier this year that cryptocurrencies have “no underlying cash flows” and “no intrinsic value,” adding that “they are akin to Ponzi schemes, and may even be worse.”
The central banker stressed, “Banning cryptocurrency is perhaps the most advisable choice open to India.”
However, the view has softened recently: “We believe that central bank digital currencies (CBDCs) could actually be able to kill whatever little case that could be for private cryptocurrencies,” an RBI official said in June.
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