SUMMARY
Retail CDBC recorded INR Rs 3 Cr worth of digital currencies in the first two days of the closed pilot
In retail pilot, use cases include P2P and P2M transactions, whereas on the wholesale side use cases include corporate bonds, commercial papers and deposit certificates
Subsequent pilots of the retail segment will also test various design choices and tech architecture and the digital rupee may launch for the entire country
The Reserve Bank of India (RBI) began its digital currency CBDC pilot for the wholesale segment in October. According to a Business Standard report, the wholesale CBDC recorded a daily average of INR 325 Cr in November.
The report added that retail CDBC recorded INR Rs 3 Cr worth of digital currencies in the first two days of the pilot. Furthermore, RBI officials reported that the system did not face major issues and all minor glitches were resolved immediately. Further, an RBI official quoted in the report called the pilot ‘an impressive performance’.
The initial response to the retail pilot has reportedly been enthusiastic as CBDC opened for use cases such as person-to-person (P2P) and person-to-merchant (P2M) transactions in the retail pilot.
On the wholesale side, CBDC is currently being used for transactions such as corporate bonds, commercial papers and deposit certificates. RBI also plans to extend its use case to cross-border transactions.
It is prudent here to mention that RBI has identified the CBDC as a legal tender- akin to cash-leveraging the strengths of both decentralised ledgers and centralised systems. According to the RBI officials, subsequent pilots of the retail segment will also test various design choices and tech architecture and the digital rupee may launch for the entire country.
“Based on experiences gleaned from multiple pilots, a robust and efficient tech architecture will be designed and appropriate design choices [will be] crystallised to launch the digital rupee for the entire country in due course,” the BS report quoted sources.
The launch of the Central Bank Digital Currency (CBDC) in India was a highly anticipated event aimed at revolutionisinhg India’s financial system. Issued by RBI and backed by the government, it aims to provide an alternative to physical cash and could potentially be used for transactions between banks and financial institutions.
It is expected to have significant implications for the country’s economy and financial sector. The RBI kickstarted the pilot for its retail CBDC on Thursday, December 1 and issued INR 1.71 Cr to four participating banks – State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank across Mumbai, New Delhi, Bengaluru and Bhubaneswar.
Unlike retail CBDC, a wholesale CBDC is only available for use by banks and financial institutions, rather than individual consumers allowing them to conduct transactions and settle payments more efficiently and securely. CBDC is aimed to be a counter to cryptocurrencies.
