India’s central bank shares concept note on CBDC; will begin pilot soon

ambcrypto.com:

India’s central bank, the Reserve Bank of India (RBI), has released a concept note on the country’s proposed central bank digital currency (CBDC).

The concept note discussed key issues such as technology and design choices, possible uses of Digital Rupee (e₹), and issuance mechanisms, among other things. The RBI will soon begin work on the pilot project.

The note has been prepared by the Fintech Department, a department created by the RBI to devise a CBDC and formulate regulations related to cryptocurrencies.

The note also informed that the body aims to work step by step for different stages of pilots before the digital currency is finally launched. It also underlined the need to identify “innovative methods and compelling use cases that will make CBDC as attractive as cash if not more.”

A CBDC, as a sovereign currency, holds unique advantages of central bank money viz. trust, safety, liquidity, settlement finality and integrity. Simply put, a CBDC is not a cryptocurrency in the strictest sense.

The note also discussed a number of motivations behind the idea of CBDC in India such as reduction in operational costs involved in physical cash management and fostering financial inclusion. The move is also aimed at bringing resilience, efficiency, and innovation to the existing payments system. In addition, it is also expected to boost innovation in the cross-border payments space.

Most importantly, the note claimed that the CBDC would offer the same services as any private virtual currencies, without the associated risks.

Here, it’s worth pointing out that the note was critical of the design of cryptocurrencies as being more geared to bypass the established and regulated intermediation and control arrangements. It is for this reason