The Reserve Bank of India’s central bank digital currency pilot project in the retail segment has components backed by blockchain technology and has several common features with physical cash, the minister of government said on Monday. State Finance Pankaj Chaudhary in the Lok Sabha.
CBDCs, a digital form of banknotes issued by a central bank, are being trialled in India. The RBI launched the pilot for the retail segment for a closed group of participating customers and merchants on December 1.
Although the Union Minister did not elaborate further on the use of blockchain technology for CBDCs, he added that the “digital rupee” – as the CBDC pilot is called – has several characteristics of physical currency.
“It (‘Digital Rupee’) was issued in the same denominations as paper money and coins…It offers characteristics of physical money like trust, security and settlement finality,” the statement read. government official.
The minister added that the CBDC will earn no interest but can be converted into bank deposits.
On the use of wholesale CBDCs, the trial began on November 1 for the settlement of secondary market transactions in government securities; the minister told the Lok Sabha that they should make the interbank market more efficient.
“Settlement in central bank money would reduce transaction costs by obviating the need for settlement collateral infrastructure or collateral to mitigate settlement risk,” he noted.
On October 7 this year, the RBI released its CBDC concept note, which discussed key considerations such as technology and design choices, possible use cases, and issuance mechanisms.
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