Ajay Kumar Choudhary, Executive Director (ED) at Reserve Bank of India (RBI) on Friday said that they are looking at an offline functionality of central bank digital currency (CBDC). He said that CBDC will soon become the medium of exchange and it needs all features of physical currency, including anonymity. In a conversation with CNBC-TV18, Choudhary added that CBDC will provide public with digital form of money and will act as an alternative to cryptos.
"CBDCs are exchangeable with currency and have all the features of currency. They have all features of physical cash like trust, safety etc. It is aimed to complement, rather than replacing physical currency," Choudhary told CNBC-TV18.
On its usage, he said that they intend to scale up customers part of retail CBDC pilot to a million customers. So far, pilot has generated about 800K transactions and multiple use cases of CBDC have come up during COVID-19.
"Now, we are looking at cross border transactions, linkage with legacy systems of other countries, etc for CBDC. Rs 1,100 crore of transactions have happened via wholesale CBDCs as of February 25. We are eagerly looking forward to private sector and fintechs’ participation in CBDC. We will see their contribution especially on offline and cross border CBDC transactions," he told CNBC-TV18.
Currently, CDBC is at pilot stages or conceptual stage across the world and 115 countries representing 95 percent of GDP are exploring it. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance are specific to each country's unique requirements.
As per Choudhary, India’s motivation in launching CBDCs is to move to a digital economy, financial inclusion, boosting innovation in cross border space and being future ready.
India announced the launch of the Digital Rupee from the fiscal year 2022-23 onwards in the Union Budget tabled in Parliament on February 1, 2022.
According to the RBI website, CBDC is the same as
currency issued by a central bank but takes a different form than paper (or polymer). It is a sovereign currency in an electronic form and will appear as a liability (currency in circulation) on a central bank's balance sheet. It can be issued in the same denominations that paper currency and coins are currently issued and distributed through intermediaries such as banks. Users can transact with e-rupee through a digital wallet the participating banks offer and store on mobile phones or devices.
First Published: Mar 3, 2023 1:32 PM IST
