India is joining the global race to develop a framework for a central bank digital currency (CBDC) and could launch trials in December for a digital rupee, CNBC reported on Friday (Aug. 27).
Shaktikanta Das, governor of the Reserve Bank of India (RBI), told the news outlet that the central bank is doing a deep dive into the security of digital currencies and exploring how it would influence the monetary policy as well as the financial industry.
“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally,” Das said.
The RBI governor also said that the central bank is weighing the different aspects of having a centralized ledger for the digital rupee against using a distributed ledger technology (DLT). A DLT is shared and coordinated across myriad sites, organizations or locations and is accessible by numerous parties. A centralized ledger is controlled by one entity.
“I think by the end of the year, we should be able to — we would be in a position, perhaps — to start our first trials,” Das said.
China was the first country out of the CBDC launch gate, trialing the digital yuan across major cities by distributing them to citizens via a lottery and encouraging them to use the coin in their everyday lives.
By the end of June, $5 billion in digital yuan transactions were processed for bill payments, transportation, shopping, catering services and government payments.
Of the many intentions of the pilot, two major goals were to ensure the CBDC was stable and user-friendly. The trials were done across numerous cities, including Chengdu, Shenzhen, Suzhou, Beijing and Shanghai.
Other countries around the globe exploring the concept of CBDCs are working to develop the best approach to establishing a framework and instituting guidelines. Brazil released CBDC guidelines in June. Sweden’s central bank is aiming to pilot a CBDC with the Riksbank and Handelsbanken.
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The Bank of Jamaica moved forward with a CDBC earlier this month, releasing 230 million JMD (nearly $1.5 million) in its first installment. The digital money will be issued to “deposit-taking institutions and authorized payment service providers” during the pilot program that is anticipated to be complete by December, PYMNTS reported.
Related news: Jamaica’s Central Bank Tests Country’s First CBDC