The Reserve Bank of India (RBI) via the Fintech Department, released a 50-page concept note to launch the central bank’s digital currency (CBDC) on Friday. In the document, the country is looking ahead to establishing a retail CBDC for businesses and individuals as well as wholesale CBDC to make interbank transactions easier.
However there is a consensus that the Indian crypto-related community doesn’t think this is a good idea. A Twitter user who identified as a film director who was qualified suggested that the crypto industry will likely be affected when the RBI announced the CBDCs. A few others have criticised the study, pointing out CBDCs could lead the country closer to becoming a surveillance state.
Related: BIS says that the CBDC pilot was a “success” because $22 million was traded.
The bank is however planning to create the retail CBDC similar to banknotes that are physical. But, it is likely to utilize an account-based system to manage the wholesale CBDC and the owner is identified by the transaction records instead of holding digital tokens, in order to establish an effective system that is resistant to double-spending.
Recently, the Indian Finance Minister Nirmala Sitharaman indicated that a digital rupee could be issued sometime between 2022 and 2023 by using blockchain technology as well as other methods. It is interesting to note that it appears that the Indian central bank doesn’t believe that blockchain’s distributed ledger technology (DLT) is able to provide the required transaction speed for large jurisdictions. Instead, it views DLT as an element of an CBDC structure that integrates centralized and decentralized functions.
Additionally, the paper mentions there is no date specific of an official launch date for the CBDC officially launching. In addition, it reiterates the dangers that cryptocurrency poses to the stability of the financial system the RBI believes that the CBDC is an “risk-free central bank’s electronic currency” which will provide customers with the same experience when dealing with currency that is digital.
Related: A think tank has started a “technical sandbox” to study CBDCs in the United States.
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