The Reserve Bank of India may introduce a digital rupee central bank digital currency (CBDC) in a phased rollout, according to its deputy governor.
On July 22, Deputy governor T Rabi Sankar said that the possibility of a pilot test is possible in the near future, though he did not offer a specific time frame. The RBI is examining the details of the CBDC. For example, whether it should be a distributed or centralized ledger, and what form the issuance would take, among other things.
He believes that a CBDC could help India in its position as a leader in payments systems,
“Every idea has to wait for its time. Perhaps the time for CBDC is nigh. It would be RBI’s endeavour, as we move forward in the direction of India’s CBDC, to take the necessary steps which would reiterate the leadership position of India in payment systems.”
However, he does not think that design and implementation will “require careful calibration and a nuanced approach.” The pilot, should it launch, will focus on the wholesale and retail segments.
India has been noticeably mum on a CBDC. One of the fastest-growing economies in the world, India, stands to gain a lot from digitizing its economy. Neighbor and economic rival China already has a tremendous head start with its CBDC, and other countries have come to realize the benefits of a digital currency.
Will a digital rupee mean no private crypto?
India’s stance on the crypto market has been one filled with conflicting statements. Panels have gone back and forth on the legality of crypto, with several rumors saying that the country would criminalize crypto. At one point, the RBI ordered banks to stop facilitating transactions related to crypto, which the Supreme Court later overturned.
India is highly active in the crypto market, with its investors gladly taking to the asset class. The growth of exchanges and the arrival of Coinbase in the country also point to potential in the market. But none of this can transpire without clear regulation.
And clear regulation is what the government appears to be working towards at the moment. Finance Minister Nirmala Sitharaman has spoken of the crypto asset class before, most recently saying that regulation would be important. This is a turn from a previous statement where she said that cryptocurrencies were not legal tender.
But there will not be a word on crypto regulation until the monsoon session of parliament. Until then, Indian investors will have to sit tight and hope that the government introduces regulation that encourages innovation.