RBI Governor Plans to Enhance Adoption of Digital Rupee with Offline Functionalities
The Reserve Bank of India (RBI) Governor, Shaktikanta Das, has announced plans to enhance the adoption of the central bank digital currency (CBDC), the digital rupee. The aim is to explore offline functionalities that will facilitate transactions in areas with limited internet connectivity.
Offline Functionality for CBDC-R
During a Monetary Policy Committee review meeting on Feb. 8, Das revealed the intention to introduce offline functionality in CBDC-R. This will enable transactions in remote areas where internet access is limited. The central bank is considering various offline solutions for diverse environments, including hilly, rural, and urban areas. These functionalities will be gradually introduced through pilot programs.
Moving Towards a Less Cash-Dependent Economy
The CBDC system currently supports person-to-person (P2P) and person-to-merchant (P2M) transactions through digital rupee wallets issued by participating pilot banks. This aligns with the RBI’s objective to monitor financial transactions more effectively and move towards a less cash-dependent economy.
Potential for Cross-Border Transactions and Integration
The RBI is also examining the potential for CBDC to facilitate cross-border transactions and integration with international legacy systems. This initiative aims to facilitate seamless financial transactions beyond domestic borders.
Pilot Success and Privacy Concerns
The RBI initiated a pilot for its retail CBDC in December 2022, achieving one million daily transactions by December 2023. While a timeline for a full-scale rollout is yet to be determined, recent advancements indicate an urgency in implementation. The RBI is also exploring technological solutions to address privacy concerns associated with the digital rupee.
Challenges in the Cryptocurrency Industry
While there is a positive outlook on CBDCs in India, the broader cryptocurrency industry in the nation faces challenges. Google recently removed several cryptocurrency-related apps from its Play Store following warnings from the Indian finance ministry about anti-money laundering regulation violations. Apple Inc. has also removed major crypto exchanges like Binance and Kucoin from its App Store, signaling tighter regulatory oversight in India’s digital asset market.
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