RBI may start CBDC pilot in call money market by October

“We are going to start the pilot on wholesale CBDC use in interbank borrowing this month or early next month,” Choudhary said while speaking at the RBI’s Innovation Pavillion at the G20 Leaders’ Summit venue.

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The Reserve Bank of India (RBI) is looking at introducing its wholesale version of Central Bank Digital Currency (CBDC) or the digital rupee in the interbank borrowing or call money market within a month, the central bank’s Executive Director Ajay Kumar Choudhary said on Sunday.

“We are going to start the pilot on wholesale CBDC use in interbank borrowing this month or early next month,” Choudhary said while speaking at the RBI’s Innovation Pavillion at the G20 Leaders’ Summit venue.

The RBI had launched the pilot for the wholesale CBDC in November 2022 aimed at settlement of secondary market transactions in government securities. It had then allowed the use of wholesale CBDC for settlement of government bond transactions in the secondary market.

The CBDC started with pilots in November last year from the wholesale segment and then extended to the retail segment also a month later. The central bank has set a target of one million retail transactions per day by the end of 2023. On the macrofinancial implications of CBDC adoption for payments, Choudhary said the risks of disintermediation taking place with commercial bank money shifting to the central bank money is always there. “That’s why the design feature is important, whether we make it interest bearing or not. If it is not interest bearing like any other currency, the chances of such disintermediation unlikely,” he said, adding that since CBDC is mimicking the currency, it won’t be interest bearing.