Research on the Central Bank Digital Currency in India – What Will Pilot CBDC Projects Bring?

India Continues Research on Central Bank Digital Currency

India is currently in the phase of conducting intensive research on Central Bank Digital Currency (CBDC), but is in no hurry to implement it, stated the central bank governor, Shri Shaktikanta Das. These studies aim to understand the potential benefits and impacts of introducing a CBDC for users, monetary policy, the financial system, and the economy.

Pilot Projects of Digital Rupee in India

Since the launch of pilot projects of the digital rupee at the end of 2022, India has gained five million retail CBDC users and 16 banks. This information was shared by Das during the Global RBI Conference dedicated to public digital infrastructure and new technologies held on August 26.

Retail and Wholesale Segments Covered in CBDC Pilot

The Governor of Reserve Bank of India emphasized that the CBDC pilots in India cover both retail and wholesale segments, starting with use cases primarily related to payments. Currently, India is also testing offline functionalities and programmability of its retail central bank digital currency.

CBDC’s Potential to Revolutionize Payment Systems

Das expressed confidence in CBDC’s potential to “support future payment systems” in both domestic and cross-border transactions. One example of CBDC programmability features that could be utilized is ensuring the delivery of funds to the intended recipient.

Indecisive Regulation on Cryptocurrencies in India

India has unclear regulations regarding cryptocurrencies, with no specific plans for regulating the buying and selling of cryptocurrencies according to the Ministry of Finance. However, the country is gearing up for a revolution in its regulatory approach to digital assets, as the Department of Economic Affairs is working on a key consultation paper regarding legislation in this area.

India is moving forward in exploring digital financial transformation, taking into account all aspects of introducing a central bank digital currency and regulating cryptocurrencies. The future of finance in India seems to be heavily intertwined with technological innovations that have the potential to transform the face of payment and regulatory systems in the country.