The Reserve Bank of India has published an analysis of the pros and cons of converting the rupee to a digital currency. This is part of its campaign to increase awareness of the CBDC project. In a 51-page publication, the Reserve Bank of India (RBI), outlines the features and reasons behind its in-development central banks digital currency (CBDC).

The central bank of India is trying to increase awareness about CBDCs. These are being developed by many central banks around the globe. It also wants to define the options and the possible positive and negative aspects of India’s introduction of a digital rupee.

This document summarizes the main motivations for issuing an Indian CBDC. It highlights trust, safety and liquidity, as well as settlement finality and integrity, as key components to a sovereign digital currency.

The primary motivation behind issuing a CBDC to India is to lower the operational costs of managing physical cash in India. 

In addition to a more resilient, efficient, and innovative payment system, the RBI also advocates financial inclusion.

The promise of an offline function for the CBDC will allow for cross-border payments to be made easier. This would be especially useful in remote areas and those without access to electricity or mobile networks.

The RBI has always kept public blockchains and cryptocurrency within arm’s reach. This document outlines its continuing view that cryptocurrencies pose a significant threat to Indian consumers because of market volatility.

“These digital assets are a threat to India’s macroeconomic and financial stability due to their negative effects on the financial sector.”

The RBI expressed concern that cryptocurrency proliferation would affect its ability to regulate monetary policies and the monetary systems. This is a threat to India’s financial stability.

The digital rupee CBDC promises to offer the same benefits and protection as public cryptocurrency, while also “ensuring consumer safety” by avoiding “damaging economic and social consequences”.

The note also outlines the differences between wholesale and retail CBDCs. The former would serve the public sector, while the latter would be restricted to financial institutions. Both forms could be introduced into India’s market, according to the RBI.

The Indian central bank discussed the possibility of indirect and direct issuances and management. The RBI would be responsible for direct issuance, and the RBI would manage the entire system. In the indirect model, intermediaries would include banks or other payment service providers.

A token-based CBDC was also recommended by the RBI, due to its similarity in use to physical cash. Wholesale users would also be interested in account-based CBDC issuance.

The document also examined the infrastructure that could support the digital rupee. It highlighted either traditional, centrally managed databases or distributed ledger technology (blockchain) as two options.

“While it is imperative to make clear design decisions in the early stages, technological considerations should be flexible and open-ended to accommodate changing needs as a result of the technological aspects of CBDCs.”

This note also discusses the role of physical currencies in anonymity, universality, and finality.

The privacy of digital transactions is not guaranteed. However, the RBI suggested that a retail CBDC may have the option to provide reasonable anonymity for low-value transactions such as physical cash.

Further stakeholder engagement will be required in order to develop a digital rupee. Iterative design will also be necessary to create a CBDC that is suitable for a wide range of uses. The Indian central bank stressed that the CBDC will complement existing money forms and offer additional digital payment options to users.


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Angie Byrd