The Reserve Bank of India (RBI) said on Friday that it could release a central bank digital currency (CBDC) model as early as the end of this year, Deputy Governor T Rabi Sankar said. He reiterated that the Central Bank is internally evaluating the possibility of introducing a fiat digital currency, addressing many aspects such as its scope, technology, delivery mechanism and validation mechanism.
In a speech on July 22, Sankar said India was also considering a phased introduction of a digital currency, saying the time is right for them. China has already started a trial for its digital currency, while the Bank of England and the US Federal Reserve are also reviewing it. “It will be difficult to fix a date on that. We should be able to release a model in the near future, probably by the end of this year,” Sankar said. In the July 22 speech, he also mentioned that such a currency would likely be in the arsenal of every central bank in the future and that setting up such a system will require a nuanced approach. Work on the DC central bank has been going on for many years now, following the massive popularity gained by private cryptocurrencies like Bitcoin.
A central bank digital currency is essentially a virtual currency, but it is issued by the central bank and enjoys sovereign support, unlike other virtual currencies. Many central banks in large economies are also exploring the possibility of introducing a CBDC.