In its annual report, the Reserve Bank of India (RBI) stated its intention to expand its ongoing pilot project for the central bank digital currency (CBDC) in the fiscal year 2023-2024.
What Happened? The RBI plans to extend the pilots for CBDC-Retail and CBDC-Wholesale by including various practical applications and features. They aim to encourage more banks to participate and extend the reach of the retail and wholesale CBDC to more regions.
“During 2023-24, the Reserve Bank of India aims at expanding the ongoing pilots in CBDC-Retail and CBDC-Wholesale by incorporating various use cases and features,” the report said.
CBDCs are a type of digital currency issued by the central bank. They resemble cryptocurrencies, but their value is fixed by the central bank. They use blockchain technology, making them a digital equivalent of physical rupees. The RBI initiated its CBDC project in 2022.
See also: India, Russia Mull Switch To Digital Currencies For Cross-Border Trade Payments
CBDC systems eliminate the costs associated with managing and distributing physical cash. This efficiency makes the transaction costs for CBDCs among the lowest globally. Furthermore, these systems operate continuously, ensuring real-time transactions all year round.
The project’s primary goal is to ensure a safe, secure, and efficient alternative to physical currency. It also aims to boost financial inclusion by extending the reach of banking services. By incorporating blockchain technology, the CBDC project can add transparency to transactions, reduce fraud, and enhance the overall trust in the monetary system.
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