The Reserve Bank of India is working toward a “phased implementation strategy” of a Central Bank Digital Currency (CBDC), RBI deputy governor T Rabi Sankar said on Thursday. A pilot to test a general-purpose digital currency is a possibility in the near future, he said.
“Every idea has to wait for its time. Perhaps the time for CBDC is nigh,” Sankar said. “It would be RBI’s endeavour, as we move forward in the direction of India’s CBDC, to take the necessary steps which would reiterate the leadership position of India in payment systems.”
The central bank is framing several considerations on the scope and legal framework of the proposed CBDC that will likely coexist with cash and digital forms of payments, Sankar said in a virtual keynote address at the Vidhi Centre for Legal Policy.
“CBDC will be in the arsenal of most if not all central banks in the world. Setting this up will require careful calibration and a nuanced approach in implementation. Drawing board considerations and stakeholder consultations are important,” he said. “However, conducting pilots in wholesale and retail segments may be a possibility in near future.”
A CBDC is a form of virtual currency or cryptocurrency that is issued by a central bank as an alternative to its currency. These are largely stable coins backed by sovereign reserves and, unlike private crypto assets like Bitcoin or Ethereum, the value of these digital coins is not subject to volatile market fluctuations.