The Reserve Bank of India (RBI) has announced its intention to speed up its central bank digital currency (CBDC) plans by the end of the fiscal year. The banking regulator enlisted the help of four public sector banks and several international fintech firms to collaborate on the pilot initiative.
“The RBI has asked State Bank of India, Punjab National Bank, Union Bank of India, and Bank of Baroda to run the pilot internally,” said an RBI official. Local publication Money Control stated that the Indian CBDC will leverage distributed ledger technologies (DLT) and work with firms with sufficient expertise in the field.
One such firm is United States-based FIS which has a stellar track record of activity in the virtual currency space. The firm’s expertise cuts across interest-bearing CBDCs, programmable payments, and cross-border payments with other central banks engaged in various stages of their CBDC development.
“FIS has had various engagements with the RBI, and our connected ecosystem could be extended to the RBI to experiment with various CBDC options,” said Julia Demidova, a senior director at FSI. She added that the firm is ready to lend its expertise in wholesale and retail CBDCs to “commercial banks where they can test and tokenize central bank money in the form of digital regulated money.”
The exact date for the rollout remains unknown as the central bank is adopting a cautious strategy to mitigate the chances of errors. The precise specifications of the digital iteration of the Indian legal tender remain unclear, but experts believe that it may be modeled after China’s digital yuan with some modifications tailored to local requirements.
India goes all in with CBDCs
India’s quest for CBDC has been heightened in recent months, and the amendment of the RBI Act of 1934 was the strongest statement of intent. Finance Minister Nirmala Sitharaman said in May that the RBI has been given a free hand to design the CBDC in their way but states that the country expects the currency to be launched within the fiscal year.
Although the bank will operate on its terms, sources say that the country’s top administrators are pushing for a phased implementation. Sitharaman praised the benefits a CBDC could offer the country’s economy, including fostering financial inclusion and improving cross-border payments.
Around the world, central banks are pushing for CBDC development in their jurisdiction to stifle the growing “cryptoization” of their economies.
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