RBI Governor Proposes Offline Solutions for Digital Rupee Adoption
Reserve Bank of India (RBI) Governor Shaktikanta Das has suggested using offline solutions to boost the adoption of the central bank’s digital rupee in remote areas. The RBI will evaluate various offline solutions, including proximity and non-proximity-based options, in hilly, rural, and urban environments to address this challenge. Das mentioned during a review meeting that it is proposed to introduce offline functionality in the digital rupee to enable transactions in areas with poor or limited internet connectivity. These functionalities will be slowly introduced through pilots.
Digital Rupee Facilitates P2P and P2M Transactions
The RBI’s digital rupee system currently facilitates person-to-person (P2P) and person-to-merchant (P2M) transactions using digital rupee wallets provided by pilot banks. The introduction of offline capabilities is part of the RBI’s efforts to enhance the digital rupee’s usability and accessibility. The idea of launching offline capabilities for the digital rupee was initially proposed by Ajay Kumar Choudhary, the RBI’s executive director. Choudhary also mentioned the central bank’s interest in testing the CBDC’s potential for cross-border transactions and its integration with legacy systems in other countries.
India Intensifies Push for CBDC
The RBI initiated a pilot of its retail CBDC in December 2022, successfully achieving its target of one million daily transactions by December 2023. The central bank has been exploring tech solutions for privacy concerns of its CBDC. An officer reportedly stated that a privacy legislation is not the only way to tackle this problem, and their team is exploring technological alternatives. The development of CBDCs has gained momentum globally, driven by motivations such as financial stability and cross-border payment efficiency. Developing countries, in particular, aim to enhance financial inclusion through the adoption of CBDCs. A total of 11 countries have already launched a digital currency, and 105 countries are exploring a national digital currency.
Hot Take: Offline Initiatives to Drive Digital Rupee Adoption
The Reserve Bank of India (RBI) is taking proactive steps to drive the adoption of the digital rupee in remote areas by proposing offline solutions. By introducing offline functionality, the RBI aims to enable transactions in areas with poor or limited internet connectivity. These offline capabilities will be gradually introduced through pilot programs. The digital rupee already facilitates P2P and P2M transactions, and the addition of offline capabilities will enhance its usability and accessibility. This move aligns with the RBI’s ongoing efforts to explore the potential of CBDCs for cross-border transactions and integration with legacy systems. With these initiatives, India is intensifying its push for CBDC adoption and contributing to the global trend of digital currency exploration.
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