ECONOMY

RBI to start pilot project on digital rupee soon, issues concept note on digital currency

The Reserve Bank of India (RBI) on Friday said that it would soon commence a pilot launch of the digital rupee for specific use cases as it tests digital currency in India. The central bank released a concept note on the Central Bank Digital Currency (CBDC) on Friday. 

The RBI said that the purpose behind issuing the concept note was to create awareness about CBDCs in general and the planned features of the digital rupee. 

“It explains the objectives, choices, benefits and risks of issuing a CBDC in India. The note also seeks to explain Reserve Bank’s approach towards introduction of the CBDC,” the central bank said in a statement. 

The concept note also discussed key considerations such as technology and design choices, possible uses of digital rupee, issuance mechanisms, etc. It examined the implications of the introduction of CBDC on the banking system, monetary policy, financial stability and analysed privacy issues.

“As the extent and scope of such pilot launches expanded, RBI would continue to communicate about the specific features and benefits of the e₹, from time to time,” the statement said. 

In her 2022-23 Union Budget speech earlier this year, Finance Minister Nirmala Sitharaman had announced the launch of the digital rupee – a digital currency backed by the central bank. The announcement had expressed government’s intention on cryptocurrencies and other virtual currencies. 

In the past, the RBI had on several occasions flagged concerns of money laundering, terror financing, tax evasion, etc with private cryptocurrencies like Bitcoin, Ether, etc and had planned to announce its own CBDC.


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