In an interview on Thursday, T. Rabi Shankar, Deputy governor of RBI mentioned the “staged rollout strategy” of the Central Bank Digital Currency (CBDC).
“Every idea has to wait for its time. Perhaps the time for CBDCs is near,” said Sankar. “It will be RBI’s effort, as we move forward in the direction of India’s CBDC, to take the necessary steps to reiterate India’s leadership in the payments system.”The RBI is giving some consideration to the scope and regulatory framework of the proposed CBDC that is likely to coexist with cash and other forms of digital payments, Sankar said in a keynote address virtual at Vidhi Legal Policy Center. “CBDC will be in the arsenal of most if not all central banks in the world,” he said.
The RBI defines a CBDC as a legal tender issued by a central bank in digital form. “It is like a fiat currency and can be exchanged 1-1 with fiat money. Only its form is different”. Sankar said.
With this India would be joining China, Russia, UK among the major economies working on launching its own CBDC.
Citing a study by the Bank for International Settlements (BIS), Sankar said that 86% of the world’s central banks are working on CBDC while 60% are experimenting with it. Up to 14% of central banks are in the testing phase.
Sankar also added that private virtual currencies like Bitcoin don’t fit the RBI’s definition of currency and is one of the driving factors behind central banks around the world including India. The experiment with CBDCs is to reduce the risk of cryptocurrencies to the real economy.