Indian Central Bank Could Kickstart Digital Rupee Trials By Year-End
Similar to other top economies, India’s central bank – the Reserve Bank of India (RBI) – is looking to start experimenting with the central bank digital currency (CBDC).
RBI governor Shaktikanta Das recently appraised CNBC stating that RBI will begin trial for the Digital Rupee by the end of this year. Thus, it will put India among the league of top economies like China, the U.K, Europe and others to consider a CBDC.
Amid the rising demand for digital assets, central banks worldwide have been forced to experiment with the technology. The Indian central bank is studying several aspects of a CBDC. This includes studying its impact on India’s financial sector as well as its security.
The RBI governor said that the central bank will also study how the Digital Rupee can impact the currency circulation and monetary policy. He added:
“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally. 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”.
Centralized or Distributed Ledger?
As the RBI will soon kickstart its CBDC experiments, they will first weigh whether to have a centralized or a distributed ledger. The distributed ledger technology (DLT) involves participation from multiple stakeholders.
These players can then simultaneously access, share, and record transactions on the network. this is contrary to a centralized ledger wherein all the data shall be owned by a single entity.
Well, from banning cryptocurrencies entirely to having its own CBDC, the Indian central bank has come a long way. The Reserve Bank of India (RBI) had already hinted at its plans for the Digital Rupee. However, last month, India’s deputy governor T Rabi Shankar stated that they will proceed with a phased implementation of its CBDC strategy.
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