RBI Governor said a big thing regarding digital currency, will physical currency end? - Newztezz Online

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Monday, May 6, 2024

RBI Governor said a big thing regarding digital currency, will physical currency end?

Reserve Bank of India (RBI) Governor Shaktikanta Das said on Monday that by permanently removing the transaction, the transaction can be made such that through e-Rupee i.e. Central Bank Digital Currency (CBDC), there will be no record.

Reserve Bank of India (RBI) Governor Shaktikanta Das said on Monday that by permanently removing the transaction, the transaction can be made such that through e-Rupee i.e. Central Bank Digital Currency (CBDC), there will be no record. With this it can become equivalent to paper currency. Das said at the BIS Innovation Summit here that India is working on making the CBDC transferable in offline mode along with introducing programmability features to help its financial inclusion goals.

Solution to privacy issues

There have been concerns about the privacy of the CBDC since its pilot launch in late 2022. Some people say that when digital currency is used, an electronic record of the transaction will be recorded, whereas there is confidentiality in cash transactions. Das said that the issue of privacy can be resolved through law and/or technology. For example, by permanently deleting the transaction. The basic principle behind this is that CBDCs can have the same privacy as cash, no more and no less.

On this occasion, the RBI Governor reiterated that India is working on making CBDC transferable even offline. He said that a major feature of cash is that it does not require network connectivity to work. Along with this, Das said that despite all its efforts, RBI still gives preference to UPI among retail users. However, he expressed hope that the situation will change in future.

CBDC is interest free

He also informed that RBI has also enabled the mutual use of CBDC with UPI. Das said India has made the CBDC interest-free by making it non-profitable to reduce any potential risk of bank intermediation. He said that the central bank creates the CBDC while the banks distribute it.

He said that to increase the reach of e-Rupee, RBI has recently announced the participation of non-banks in the pilot phase. It is expected that the reach of banks can be leveraged to distribute CBDCs and provide value-added services.

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