India CBDC (Central Bank Digital Currency)
India is currently exploring the potential of issuing its own Central Bank Digital Currency (CBDC). A CBDC is a digital version of fiat currency, issued by a central bank and backed by their national government. It differs from other forms of digital money such as cryptocurrencies in that it does not rely on decentralized consensus algorithms for its security or trustworthiness. Instead, India’s CBDC would be centrally managed and regulated by the Reserve Bank of India (RBI). In addition to providing citizens with an alternate form of payment, India’s proposed CBDC could also be used to facilitate financial inclusion among historically unbanked populations.
The concept of a Central Bank Digital Currency has been gaining traction around the world since China announced plans to launch its own digital yuan earlier this year. Although details are still scarce regarding when and how India will implement its own version, analysts believe that if successful, it could set off ripple effects across global markets as more countries embrace similar initiatives.
For now, the RBI has established a unit dedicated to researching the feasibility and practicality of introducing a CBDC in India. This team is expected to submit recommendations later this year which will provide guidance on how best to move forward with such an initiative going forward. Further steps may involve pilot testing various aspects before any official roll out can occur though no timeline for these activities have yet been published either publicly or internally at the RBI .
