RBI, (the Reserve Bank of India) has said that it is working towards a phased implementation master plan for its digital currency and inspecting use cases where it can be utilized with minimum disturbance. Presenting a strong justification in favor of a central bank digital currency (CBDC) for India, the RBI has said that it would minimize currency costs for the government and would aid counterbalance the threat of virtual currencies.
At a webinar organized by the Vidhi Centre for Legal Policy on Thursday, T Rabi Sankar, deputy governor of RBI said that developing their own CBDC could provide the people with uses that any private virtual currency can offer and to that limit might preserve the public liking for the rupee. It could also protect the public from the unusual level of uncertainty some of these virtual currencies encounters.
Continuing further, Sankar said that managing pilots on CBDC in retail and wholesale sectors may be a prospect in the upcoming days. Aforesaid, each idea will’ve to wait for its time. Maybe the time for CBDCs is approaching.
Sankar, on the outcomes of digital currencies on banks, commented that while it could lower the requirement for maintaining deposits, the effect would be restricted as they can’t pay interest. Therefore, the potential costs of disintermediation imply that it is significant to implement and design CDBC in a manner that creates the demand for CBDC, in relation to deposits, manageable.
The major problems inspected by the RBI include whether it should be a centralized or distributed ledger, whether these should be used in wholesale as well as retail payments, whether it should be account-based or token-based, whether it should be straightaway issuance by the RBI or through banks and the degree of anonymity.