‘CBDC to Come with Adequate Safeguards’

“They will undermine the RBI’s ability to deal with issues related to financial stability,” the governor said in Mumbai.

Separately, Das said Mint Road was working on the introduction of the proposed central bank digital currency (CBDC), and would ensure adequate safeguards for a monetary unit that will eventually be the digital equivalent of the printed legal tender.

“We can’t give a timeline on CBDC, but what I can say is that whatever we are doing, we are doing very carefully and cautiously,” Das said.

“We have to keep risks like cyber-security and counterfeiting in mind. So, we are proceeding cautiously and can’t give a timeline.”

Unlike private crypto currencies, a CBDC is issued by the central bank and is another form of fiat currency.

Finance Minister Sitharaman had announced in the Budget that the RBI would introduce a central bank-backed digital currency this year. According to T Rabi Sankar, deputy governor, RBI has been working on a CBDC for the past 18-24 months.

“As announced, we will launch the digital rupee this year and test design features and other aspects of the currency,” Sankar said. “Work is progressing on wholesale and retail use of the CBDC. Account-based models are easier to develop, whereas token-based models take longer to develop. Which model we will decide to test first will be decided at a later date.”

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