March 31, 2023

India’s Central Bank Digital Currency to Serve as Alternative to Cryptocurrency

India’s central bank digital currency (CBDC) will serve as an alternative to cryptocurrency, according to an official of the Reserve Bank of India (RBI). Ajay Kumar Choudhary, Executive Director of the RBI, said that the digital rupee must possess all the attributes of physical currency, including anonymity.

In an interview with CNBC-TV18, Choudhary provided updates on India’s CBDC, stating that the central bank is exploring the offline functionality of the digital rupee. He emphasized that the CBDC will soon become a medium of exchange in India and needs to have all features of physical currency.

Choudhary also noted that the design of India’s CBDC will be the least disruptive and will not replace physical currency. He added that the RBI is working on a phased implementation of the digital rupee, starting with wholesale and retail segments.

India has been exploring the possibility of launching a CBDC for some time now, with the RBI setting up a high-level committee to study the feasibility of a digital rupee in 2017. The country’s central bank has been closely monitoring the developments in other countries, including China, which has already launched its own CBDC.

The launch of India’s CBDC is expected to bring several benefits, including reducing the cost of printing physical currency, promoting financial inclusion, and enhancing the efficiency of the payment system. However, concerns have been raised about the impact of a digital rupee on the banking system and the potential for it to be used for illicit activities.

Despite these concerns, the RBI remains committed to launching a CBDC, with Choudhary stating that the central bank is working towards a phased implementation of the digital rupee. The launch of India’s CBDC is expected to be a significant development in the country’s digital economy and could pave the way for other countries to follow suit.

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