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The Reserve Bank of India (RBI) is examining the feasibility of a central bank digital currency (CBDC) and may launch a pilot project in the fiscal year April 2022 to March 2023, a senior RBI official said, according to a local media report.
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“I think somewhere it was said that at least by the first quarter of next year, a pilot could be launched. We are bullish on that,” said P. Vasudevan, chief general manager at the Department of Payment & Settlement of the RBI, said at the State Bank of India’s Banking and Economic Conclave on Wednesday.
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A CBDC is a digital offshoot of a legal tender issued by the central bank with potential wide use by households and businesses to make payments and store value. The CBDC may help governments airdrop money directly into the pockets of the needy during times of stress like last year’s coronavirus-induced country-wide lockdown.
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China appears to be leading the global race to launch a digital currency, having distributed 10 million digital yuan to Shenzhen citizens a year ago. China’s CBDC has been used to conduct 62 billion yuan ($9.7 billion) of transactions as of the end of October, an official from the People’s Bank of China said.
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Meanwhile, the RBI is on the job and looking into the various issues, and nuances related to CBDC like distribution and validation mechanisms and potential targets – wholesale/retail, Vasudevan said.
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“It’s not a simple thing to just say that CBDC can be a habit from tomorrow on,” he noted, adding that a CBDC’s efficacy depends on how its implemented.
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“The central bank is also checking if intermediaries can be bypassed altogether, and most importantly, checking if the technology should be decentralized or should be semi-centralized,” Vasudevan added.
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The Indian government may table a crypto regulation bill in the upcoming winter session of the parliament, scheduled to start from Nov. 29 and end around Dec. 23.
Read more: India to Ban Crypto as Payment Method but Regulate as Asset: Report