India’s central bank, the Reserve Bank of India (RBI), is expanding its Central Bank Digital Currency (CBDC) project to include programmability and offline usage.
The central bank of the world’s most populous country said in its first monetary policy statement for 2024 on February 8 that it is exploring ways to enable additional programmability and offline functionality for CBDC retail payments.
The CBDC retail pilot currently enables person-to-person and person-to-seller transactions, RBI said in a statement.
RBI, which will celebrate its 90th anniversary of establishment and operation in April, noted that while programmatic features facilitate special-purpose transactions, offline features enable transactions in areas with poor or limited internet connectivity.
“At this point, India’s potential growth is being driven by structural drivers such as improvements in physical infrastructure. Developing world-class digital and payments technologies; ease of doing business; strengthening workforce participation; “The quality of fiscal expenditure has improved,” the RBI said in a press release.
CBDC is a digital form of currency issued by a country’s central bank. According to the Atlantic Council, 130 countries, representing 98% of global gross domestic product (GDP), are exploring CBDCs.
“This is a big move to further expand CBDC adoption and provide new use cases for end users. We hope to open this feature to all developers so that new use cases can emerge. It will be interesting to see how adoption increases as programmability is introduced.” Nischal Shetty, co-founder of Shardeum, an EVM-based linearly scalable smart contract platform, said on Linkedin.
While the RBI is integrating the offline functionality of CBDC, the existing popular payments platform, Unified Payments Interface, has already started offering offline payments without using the internet.
India’s CBDC has made significant progress, with the RBI reaching its target of 1 million daily transactions. The South Asian country’s central bank launched the first digital rupee pilot in the wholesale sector on November 1, 2022, while the retail digital rupee pilot began on December 1, 2022.
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“If there is a way to connect this CBDC to a decentralized blockchain, we could see INR being incorporated into DeFi (decentralized finance). This will help the INR to strengthen and this will have a positive impact on India,” Shetty added.
As of February 7, the Indian rupee (INR) remained stable compared to emerging market countries and some developed countries, according to the RBI. Despite the strength of the US dollar and rising US Treasury yields, the value of the INR against the US dollar at 0.9% for the fiscal year remains low compared to emerging market peers such as the Chinese yuan, Thai baht, Indonesian rupiah, Vietnamese dong and Malaysian ringgit. , and several developed economy currencies such as the Japanese yen, Australian dollar, South Korean won, and New Zealand dollar.
The recent relative stability of the INR “reflects the strength and stability of the Indian economy, sound macroeconomic fundamentals, financial stability and the improving external position of India,” the RBI said in a statement.
The RBI recently initiated discussions with the Hong Kong Monetary Authority (HKMA), the US Federal Reserve and international payments platform SWIFT to explore cross-border settlement options for CBDCs. RBI is considering introducing digital rupee into the call money market and plans to use CBDC as a token for call money settlement. In the Indian financial market, call money is an important sector that allows banks to earn interest on surplus funds.
“CBDC aims to complement, rather than replace, money in its current form and is envisaged to provide users with an additional means of payment, rather than replace existing payment systems,” the RBI said in its October 2022 CBDC concept note. It was revealed.
To learn more central bank digital currency Read on for some design decisions to consider when creating and getting started. nChain’s CBDC Playbook.
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