RBI proposes phased approach to CBDC rollout

The Reserve Bank of India (RBI) has backed a phased approach to the rollout of a CBDC to preserve oversight of the process. News 18 reports, citing the regulator’s annual report.

“The Reserve Bank proposes applying a stepped approach to CBDC deployment, stepping through the stages of concept confirmation, pilot projects and launch. […] the relevant design elements of CBDC are being studied, which can be implemented with small breaks or without them,” the document states.

The RBI noted that it is focusing on identifying the pros and cons of launching the digital rupee. In the regulator’s view, its design should “conform to the objectives of monetary policy, financial stability and the efficient functioning of currency and payment systems”.

The central bank also announced the creation of the Innovation Hub (RBIH) to spur innovation. The hub will collaborate with financial-sector institutions, technology firms and industry bodies.

Under its mandate, the RBIH will develop internal infrastructure to advance fintech research and facilitate engagement with startups.

In early 2021, the Reserve Bank began to study the potential of the digital rupee. The regulator’s interest lay in the feasibility of a rollout and the potential of such an instrument.

In July, the RBI said it was working on the phased implementation strategy for CBDC and the process of launching it in both wholesale and retail segments.

In November, the regulator conceded that in the first quarter of fiscal 2022 it might conduct a pilot launch of the national digital currency.

In May 2022, the media reported concerns of the Reserve Bank of India regarding the possible dollarisation of the economy due to cryptocurrencies.

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