The Reserve Bank of India (RBI), the nation’s central bank, is exploring the viability of a central bank digital currency (CBDC) and may launch pilot tests early next year, according to a report in local news outlet the Business Standard.
RBI Plans CBDC Pilot
According to P. Vasudevan, chief general manager at the Department of Payment and & settlement of the RBI, the central bank is optimistic about the pilot program launching as soon as the first quarter of 2022.
Central bank digital currencies are exactly what the name suggests: they are digital versions of a country’s physical currency and are backed by the monetary reserves of a central bank. They bear some similarities to stablecoins, which are pegged 1:1 to a specific fiat currency. CBDCs are intended to facilitate peer-to-peer electronic payments, and even more importantly, hasten money disbursals in moments of crisis.
India is currently examining various underlying issues related to a digital rupee such as how it will be distributed, the validation mechanism, and whether it will be retail (available for the general public) or wholesale (restricted to limited financial institutions).
“It’s not a simple thing to just say that CBDC can be a habit from tomorrow on. The central bank is also checking if intermediaries can be bypassed altogether, and most importantly, checking if the technology should be decentralized or should be semi-centralized,” Vasudevan continued.
Other Countries Are Also Exploring CBDCs
Today, approximately 90 governments around the world are exploring or experimenting with CBDCs, according to the research center Atlantic Council.
Though the Bahamas and other Caribbean island nations have already fully rolled out a CBDC, China is the first major nation that seems to be leading the digital currency race, even airdropping millions of digital yuan to citizens for testing in the real world. As ZyCrypto previously reported, the country is also pushing McDonald’s, Visa, and Nike to expand trials as it looks to launch a full-fledged CBDC during the Beijing 2022 Winter Olympics in February.
While the increasing buzz around CBDCs shows no signs of abating, some observers are not sold on the idea. Former whistleblower Edward Snowden, for instance, described CBDCs as “cryptofascist currencies” for “casually annihilating the savings of every wage-worker”.