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Reserve Bank of India Confirms It Is Looking Into Making a Central Bank Digital Currency

India’s central bank, the Reserve Bank of India’s (RBI), has confirmed the creation of an inter-departmental group tasked with analyzing the feasibility of issuing a rupee-backed central bank digital currency (CBDC), the Economics Times reports August 30.

The group’s establishment and focus was detailed in the bank’s Annual Report 2017-18, confirming earlier details that followed a meeting of India’s Monetary Policy Committee (MPC) in April.

The impetus for investigating the issuance of a fiat-tethered CBDC reportedly derives in largely from cost considerations: the Economic Times cites statistics that suggest the cost of printing paper notes in India was 6.3 billion rupees (about $89 million) for the financial year 2018.

Other factors include “rapid changes in the payments industry” and the “rise” of private digital tokens, according to the Economic Times.

EY India’s Mahesh Makhija told the paper that "the idea of a central bank issued digital currency is very promising, though issues around digital counterfeiting will need to be addressed." He further remarked that RBI’s indication that it is open to the idea of using distributed ledger technology (DLT) for payment systems, clearing, and settlement processes is “a welcome development.”

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