India’s apex bank will soon launch a pilot version of the digital version of India’s currency
Mumbai Oct 9 (IANS) The Supreme Bank of India — Reserve Bank of India (RBI) – said it will soon start piloting the digital version of the Indian Rupee for specific use cases.
It has also released a Concept Note on Central Bank Digital Currency (CBDC) which aims to raise awareness of such currencies in general and the planned features of the digital rupee in particular, the RBI said in an official statement.
The RBI concept note states that central bank digital currency is sovereign currency issued by central banks in accordance with monetary policy. It will appear as a liability on the central bank’s balance sheet.
“The concept note also addresses key considerations such as technology and design choices, possible uses of the digital rupee and issuance mechanisms, among others,” the RBI said in a statement.
According to the concept note, digital currency should be accepted as a means of payment, legal tender and safe store of value by all citizens, businesses and government agencies.
The digital currency will be freely convertible into commercial bank cash and cash. It will be a fungible legal tender for which holders will not need to have a bank account.
In the Union budget for 2022-2023, the finance minister had stated that the RBI would deploy a digital equivalent of the rupee in the current financial year.
As the scale and scope of these pilot launches expands, the RBI will continue to communicate from time to time about the specific features and benefits of the digital rupee, it said in a statement. .
The digital rupee is expected to reduce the cost of currency issuance and transactions. Faced with a decreasing use of paper money, central banks are now looking to popularize a more acceptable form of electronic money.
The central bank digital currency will be backed by India’s state-of-the-art payment systems which are affordable, accessible, convenient, safe and secure. The apex bank concept note said the electronic rupee will boost India’s digital economy, improve financial inclusion and make monetary and payment systems more efficient.
“The electronic rupee will provide an additional option to the forms of currency currently available. It is not significantly different from banknotes, but being digital it is likely to be easier, faster and cheaper. It also presents all the transactional benefits of other forms of digital money,” the RBI said in the statement.
The concept note stated that the digital currency should be developed as a highly scalable platform to support very high transaction volume and rate without performance degradation. It must be robust to ensure the stability of the financial ecosystem and have tamper-proof access control protocols and cryptography for data security, among other features.
The central bank digital currency is expected to generate huge datasets in real time. “After considering anonymity concerns, proper analysis of CBDC-generated big data can aid in evidence-based policymaking. It can also become a rich data source for service providers for information on financial products,” the concept note reads.
Emphasizing consumer protection, RBI calls it an important pillar of financial stability. The central bank called for a consumer protection framework that should take into account variations in consumer digital literacy and ways to increase consumer understanding and transparency.
The RBI has called for seamless access to digital currency by consumers. He also emphasized effective and efficient resolution of customer complaints through a robust mechanism.