- India’s CBDC has attracted 5 million users and 16 banks.
- The RBI is in no rush to launch a full-scale CBDC program yet.
As a seasoned analyst with years of experience in the digital economy, I find India’s gradual approach to its CBDC program intriguing yet prudent. Having witnessed the rapid growth and potential pitfalls of various fintech innovations around the world, I appreciate the Reserve Bank of India’s (RBI) cautious stance. The RBI’s emphasis on understanding the impact of CBDC on users, monetary policy, financial systems, and the economy is a testament to their commitment to stability and long-term success.
According to the Governor of India’s central bank, the Reserve Bank of India (RBI), at least 5 million users have joined India’s Central Bank Digital Currency (CBDC) initiative, and a total of 16 banks are involved in this program. The RBI governor, Shantikanta Das, shared these figures during his speech on Monday in Bengaluru, India. He emphasized the significant growth of the program but also made it clear that the RBI intends to proceed cautiously with its implementation.
Das stressed that it’s crucial not to hastily implement central bank digital currencies (CBDC) across the entire system until a thorough understanding of its effects on users, monetary policy, the financial system, and the economy is achieved. Instead, he suggested a gradual rollout of CBDC over time.
2022 marked the first time Finance Minister Nirmala Sitharaman publicly mentioned Central Bank Digital Currencies (CBDCs) in her budget address. Towards the close of that year, the Reserve Bank of India initiated pilot projects for both retail and wholesale CBDCs. By the end of 2023, India’s retail CBDC managed over a million transactions on one particular day.
CBDCs Can Bring Unique Use Cases to the Indian Population
Starting from 2023, the Reserve Bank of India (RBI) has been exploring ways to utilize this asset effectively, focusing on its offline transaction capabilities and programmable features. In a discussion, Das highlighted that the programmability aspect of Central Bank Digital Currencies (CBDCs) could significantly contribute to financial inclusion by ensuring funds are accurately delivered to specific recipients. He also provided examples demonstrating how the programmability of CBDCs could positively impact underserved populations, such as farmers.
“Additional scenarios for evaluating aspects like privacy and offline functionality are suggested for a phased implementation. Yet, there is ongoing debate about Central Bank Digital Currencies (CBDCs) since some people believe that the control exerted by governments could compromise individual privacy, as CBDCs are presented as more secure alternatives to cryptocurrencies.”
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2024-08-27 22:29