RBI may try use of CBDCs in CPs, CDs on pilot basis: Shaktikanta Das

RBI Governor Shaktikanta Das

The Reserve Bank of India (RBI) Governor Shaktikanta Das on May 6 said the central bank may try usage of Central Bank Digital Currency (CBDC) in commercial papers and certificates of deposits going forward on a pilot basis.

"Going forward, other instruments like commercial papers and certificates of deposits will be tried out in the pilots along with securities tokenisation features," Das said during an interaction at BIS Innovation Summit 2024, at Basel, Switzerland.

Das further said the central bank still see preference for UPI among the retail users over CBDCs.

The RBI launched the wholesale pilot of CBDC on November 1, 2022, to settle trades of G-Secs using the digital rupee.

The retail CBDC pilot was started on December 1, 2022. The government proposed to introduce the digital rupee, using blockchain and other technologies, to boost the digital economy and lead to a more efficient and cheaper currency management system, finance minister Nirmala Sitharaman said in her budget speech on February 1, 2022.

The pilot covered select locations in a closed user group of customers and merchants. The e₹-R (e-rupee-retail) would be in the form of a digital token that represents legal tender and would be issued in denominations that paper currency and coins are currently issued, the RBI said on November 29, 2022.

Das further said that so far the central bank have gained significant insights from the two pilots on various aspects such as design, technology, and user behaviour. These insights are facilitating scalability, resilience and vagility of CBDCs system.

"The pilot is also enabling us to make informed decisions like positioning the CBDCs along side the UPI," Das added.

Token based system present some unique advantages. Tokenisation introduces two key concepts, smart contracts and programmability, Das said.

Further, he said the benefits from these two arises from automation which enhances efficiency, reduces reliance on intermediary and enables faster settlements. This in turn to unlocking new possibilities in the financial system.