India’s central bank, the Reserve Bank of India (RBI) is likely to launch a digital currency trial program or Central Bank Digital Currency (CBDC) in December this year.
This was stated by the Governor of RBI Shaktikanta Das. This digital money will be named the digital rupee which is an online version of currency and coins.
“We are very careful because this is a completely new product, not for RBI, but globally,” said Shaktikanta Das as quoted by CNBC International, Friday (27/8/2021).
RBI Faced with 2 Choices
Shaktikanta Das revealed that RBI is also studying the choice between having a centralized ledger for crypto money or using distributed ledger technology (DLT).
DLT refers to a digital database that allows multiple participants to access, share, and record transactions simultaneously. Centralized ledger means a database owned and operated by one entity, in this case the central bank.
“I think by the end of the year, we should be able – we will probably be in a position – to start our first trials,” said Shaktikanta Das.
Last month, RBI Deputy Governor T Rabi Shankar said the central bank was heading for a “phased implementation strategy” for the CBDC digital currency.
Central banks of a number of countries are considering launching CBDCs, this is triggered by the decline in the use of cash and increasing public interest in cryptocurrencies.
China’s central bank, the People’s Bank of China is leading the way in this digital money trial. They’ve done trials in the real world in several cities.
CBDCs are different from cryptocurrencies. First, they will be fully regulated and under a central center, usually a central bank.
Second, instead of being an asset that can be acquired at highly fluctuating prices, central bank digital currencies will work more like traditional currencies, and will be widely accepted.
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