The Reserve Bank of India (RBI) has indicated the possibility of conducting pilot launch of its digital currency in wholesale and retail segments in the near future. RBI Deputy Governor T Rabi Sankar said, “Generally, countries have implemented specific purpose CBDCs (central bank digital currencies) in the wholesale and retail segments. Going forward, after studying the impact of these models, launch of general purpose CBDCs shall be evaluated.” According to him, the RBI is currently working towards a phased implementation strategy and examining use cases which could be implemented with little or no disruption. Some key issues under examination are: the scope of CBDCs — whether they should be used in retail payments or also in wholesale payments — and the underlying technology — whether it should be a distributed ledger or a centralised ledger, for instance, and whether the choice of technology should vary as per use cases. It is also examining the validation mechanism — whether token based or account based, distribution architecture, whether direct issuance by the RBI or through banks and degree of anonymity. “However, conducting pilots in wholesale and retail segments may be a possibility in near future,” Sankar said Thursday at a webinar on virtual currencies by Vidhi Centre for Legal Policy Research. Although CBDCs are conceptually no different from banknotes, their introduction would require an enabling legal framework since the current legal provisions are made keeping in mind currency in paper form, he said.
