RBI eyes phased introduction of central bank digital currency: Deputy governor T Rabi Sankar

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The Reserve Bank of India is working on a phased implementation strategy for central bank digital currency, RBI deputy governor T Rabi Sankar said on Thursday.

“Going forward, after studying the impact of these models, the launch of general-purpose CBDCs shall be evaluated. RBI is currently working towards a phased implementation strategy and examining use cases which could be implemented with little or no disruption,” Sankar said at a webinar organised by the Vidhi Centre for Legal Policy in New Delhi.

A CBDC is a legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different.

“While interest in CBDCs is near-universal now, very few countries have reached even the pilot stage of launching their CBDCs. A 2021 BIS survey of central banks found that 86% were actively researching the potential for CBDCs, 60% were experimenting with the technology and 14% were deploying pilot projects,” Sankar further said.

The deputy governor said that several legal frameworks would also need to be considered before launching a CBDC.

“Although CBDCs are conceptually no different from banknotes, the introduction of CBDC would require an enabling legal framework since the current legal provisions are made keeping in mind currency in paper form,” Sankar said.

“CBDCs is likely to be in the arsenal of every central bank going forward. Setting this up will require careful calibration and a nuanced approach in implementation,” he added.