The Reserve Bank of India (RBI) will introduce its own version of Central Bank Digital Currency (CBDC) in a phased manner, after carefully weighing its impact on various issues, including how it could hamper the deposit mobilisation abilities of banks, and its potential effect on the conduct of the monetary policy, deputy governor T Rabi Sankar said in a speech on Thursday.
Accordingly, RBI would evaluate the scope of CBDCs — whether they should be used in retail payments or also in wholesale payments. The underlying technology, whether it should be a distributed ledger or a centralised ledger, is also being evaluated. Whether the underlying technology should vary based on use cases is being debated at the central bank.
Further, besides, other modalities such as token-based or account-based validation mechanism, distribution architecture (direct issuance by the RBI or through banks), and what would be the degree of anonymity granted for such CBDCs are also being determined at the RBI.
The wider adoption of CBDC may also mean that the monetary policies have to be formed in a way to inject more liquidity in the system than needed to plug currency leakage from the banking system.
Therefore, the RBI will introduce the CBDC after careful consideration, and in any case, keeping India’s leadership position in the global payment system in mind, the deputy governor said.