India’s Reserve Bank (RBI) is gearing up to enhance the offline transfer capabilities of its Central Bank Digital Currency (CBDC). According to The Economic Times, RBI Governor Shaktikanta Das revealed at the 2024 BIS Innovation Summit that there has been an increase in transactions among individual users of India’s digital rupee (CBDC).
To facilitate CBDC transactions, Das emphasized the need for broader adoption of the Unified Payments Interface (UPI). Currently, UPI is still the preferred choice among individual users, despite CBDC transactions reaching as high as 1 million per day. However, Das expressed hope for a change in this preference in the future.
The offline mode for CBDCs will replicate the advantages of cash by enabling transactions even without internet access. Das also confirmed that CBDC will provide a level of anonymity similar to cash. He suggested that the issue of anonymity could be addressed through legislation or technology, such as permanently deleting transactions, ensuring that CBDC remains as anonymous as cash.
Das also highlighted that India’s digital rupee is designed not to offer interest, unlike traditional bank deposits. This feature ensures that banks continue to operate under their existing business models and reduces the risk of eliminating banks from the mediation process.
RBI is actively working on integrating the upcoming CBDC with fast payment systems, particularly UPI, in response to feedback from individual users. One of the steps taken by the bank is the introduction of a single QR code that can be used for both UPI and CBDC payments, simplifying the acceptance process for businesses.
While many developed countries approach CBDC trials with caution, India stands out as a pioneer in this field. The country has been expanding the use of its digital currency, e-Rupi, through a pilot program launched in December 2022. More than 1.3 million people and 300,000 businesses have participated in the program so far. As of March 2023, over $1.2 million worth of rupees have been circulated, with the majority being used in the wholesale segment.
India’s RBI is part of the vast majority (98%) of central banks worldwide actively researching CBDCs. These studies aim to enhance the functionality and accessibility of central bank money.
Disclaimer: The information provided in this article is not investment advice. Investors should be aware of the high volatility and risks associated with cryptocurrencies and conduct their own research.
