The latest addition to the race for a central bank digital currency is none other than India. Currently, the Reserve Bank of India (RBI) is the newest monetary regulator to explore optimal possibilities of a CBDC.
This Monday, the bank released a “Payment and Settlement Systems in India” booklet in which it reveals where it currently finds itself in the issue of a CBDC. The RBI commented,
“Private digital currencies (PDCs) / virtual currencies (VCs) / cryptocurrencies (CCs) have gained popularity in recent years… Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalize it.”
The Bank has been studying a possible CBDC for a few years now. As a result, in 2018 it created an inter-departmental group, whose goal is to study the workings of an Indian CBDC.
Back then, the RBI governor claimed that it was “too early” to act, due to an insufficient technological standard, mainly due to India’s huge geographical diversity and economic divide. It would be a colossal challenge to integrate an electronic monetary system in some regions, where electricity and internet are a privilege only a few can access. The RBI is currently encouraging market handlers to create offline payment methods for these remote locations.