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RBI likely to start CBDC pilot programmes for CPs, CDs

Submitted by admin on May 10th, 2024

RBI Governor Shaktikanta Das said on Monday that the Central Bank of India reportedly has a plan to start a pilot program for the Central Bank Digital Currency or CBDC’s wholesale segment in commercial papers and certificates of deposits.

Das added that the CBDC’s daily retail transaction volume through interoperability with the UPI (United Payments Interface) has touched one million on a daily basis but retail users continue to show a strong affinity to the UPI.

According to him, a more extensive transaction volume is needed to have a complete grip on CBDC’s broader economic impact, especially on the banking sector and monetary policy.

Das asserted that deleting transactions permanently can make the CBDC or the e-rupee anonymous and at par with paper currency.

“Anonymity can be addressed through legislation and/or through technology. For example, through permanent deletion of transactions,” Das explained.

He added, “The basic principle is that CBDC can have the same degree of anonymity as cash, no more and no less.”

CBDC’s benefits will be more apparent after introducing programmability features and offline usage.

The basic goals of these pilot projects are to analyze changes in consumer behavior in regards to bank deposits, he put in.

“Now, going forward, other instruments like CPs and CDs will be tried out in the pilots, along with security and securities tokenization features,” said Das while speaking at the BIS Innovation Summit 2024, in Basel, Switzerland.

On November 1, 2022, the RBI launched the wholesale pilot of CBDC to settle in government bonds.

After one month, the pilot project took off.

“We have also enabled interoperability of CBDC with UPI. While the number of transactions has reached a high of one million a day, we still see a preference for UPI among the retail users. We of course hope that this will change, going forward,” Das stated.

“Now, the advantages of CBDCs will be more visible when we enable offline use and programmability features. A key objective of the pilots is to study the change in consumer behavior vis-a-vis bank deposits. We need many more transactions to understand its wider economic effects, especially on monetary policy and the banking system,” he elaborated.