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The Reserve Bank of India has declared that the country’s first digital currency testing might begin as early as December 2021. Shaktikanta Das, the central bank governor, stated in an interview that central bank digital currency [CBDC] has been debated for some time, but the authorities have been cautious about its extent.
“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally.”
The RBI has been researching the security and financial elements of a CBDC, as well as how it may affect the country’s monetary policy. In terms of a digital rupee, the government must currently pick between a centralised ledger and distributed-ledger technology [DLT].
DLT records asset transactions and details in numerous locations at the same time. While the centralised ledger is owned and controlled by a single institution, in this case the Central Bank.
When asked about a rough timescale for this project, Das responded,
“I think by the end of the year, we should be able to…perhaps… start our first trials.”
Earlier this month, deputy governor of RBI, T Rabi Shankar noted that the central bank was working towards a “phases implementable strategy.” He had also added that,
“These are extremely involving technology and business choices that one has to make. So, it will be difficult to pin a date on it (central bank digital currency) but we should be able to come out with a model in the near future, probably by the end of this year.”
As the governor confirmed the possibility of starting CBDC trials, India may be recognised as a member of the club by the end of the year, comprising of nations already working towards their respective CBDCs. China has been at the forefront, as it is the only country that has previously conducted real-world trials of its digital yuan.
Other Central Banks, on the other hand, such as the European Central Bank and the Bank of England, are currently debating the deployment of a digital euro and a CBDC located in the United Kingdom, respectively.