The central bank is looking into several aspects, including the security of digital currency, its impact on monetary policy and the cash in circulation.
The first-ever trials for digital rupee in India may be launched by December 2021, Reserve Bank of India (RBI) Governor Shaktikanta Das was reported as saying on August 27.
Also referred to as central bank digital currencies (CBDC), the digital currency is proposed to be a legal tender in online form. In other words, the digital rupee will be the online version of the fiat currency that is in circulation.
The RBI is “being extremely careful about it because it’s completely a new product”, Das said, while speaking to CNBC.
The central bank is looking into several aspects, including the security of digital currency, its impact on monetary policy and the cash in circulation, Das told the news channel in a pre-recorded interview.
“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 was quoted as saying.
The RBI chief further noted that the central bank is contemplating the choice between using a centralised ledger for the digital currency and having a digital database with access to multiple participants – also known as distributed ledger technology (DLT).
In the case of a centralised ledger, the database would be owned and operated only by the central bank.Notably, a number of leading economies including the UK, China and Europe are exploring the use of digital currencies. The RBI began considering the trials after a decline in usage of cash and growing interest among people about cryptocurrencies.
