India’s apex bank governor Shaktikanta Das has disclosed that the country may commence its first trial of its Central Bank-backed Digital Currency (CBDC) by December.
“I think by the end of the year, we should be able to — we would be in a position, perhaps — to start our first trials,” Das said in a pre-recorded CNBC interview released yesterday.
India Cautious About CBDC
According to Das, while various countries are exploring the possibilities of unveiling their national CBDCs, India is just exercising caution since the financial instrument is relatively new.
“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally,” Das was quoted as saying.
For Das, being careful about CBDCs means the country is studying every aspect of the form of payment, including its security, its impact on the nation’s financial sector, and how it would affect the existing monetary policy, etc.
The Reserve Bank of India (RBI) governor disclosed that the apex financial institution is still contemplating whether its CBDC would use the popular Distributed Ledger Technology (DLT) or adopt a centralized ledger.
While the former allows for the possibility of multiple actors accessing, recording, and sharing transactions simultaneously, the latter would see the transaction history owned by a single entity.
Rising Interests in CBDCs by Central Banks
It is no longer news that various central banks have launched research into the possibility of developing a CBDC for their country.
The need to develop a CBDC became more pressing mid-last year when demand for cash saw a massive decline as a result of the global economic crisis caused by the coronavirus pandemic.
Countries fear that if they do not consider the possibility of developing a CBDC in earnest, they may be left behind when other countries roll out their official version of the financial instrument.
With China successfully completing its CBDC trials on different occasions, India has been heavily linked to a digital national currency project.
As reported in January, the Indian government said it was considering issuing its digital currency in a bid to meet up with the shift in consumer behavior from traditional payment methods to digital versions.
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