MUMBAI: Reserve Bank of India governor Shaktikanta Das reiterated on Friday that the central bank may launch a pilot of its digital currency by December 2021. However, the RBI is yet to finalise whether to launch the currency using distributed ledger technology (DLT) or a centralised ledger.
DLT is the platform on which cryptocurrencies are based, enabling them to be held and traded without any central authority. The statement by Das indicates that the RBI is on track with its plans for a central bank digital currency (CBIC). “We are being extremely careful about it because it’s completely a new product, not just for the RBI, but globally,” Das told a TV channel. He said that the RBI is studying various aspects of digital currency,
Reserve Bank of India including its security, impact on India’s financial sector as well as how it would affect monetary policy and currency in circulation.
In the interview, Das said that the monetary policy could change course if there was a sign of durable recovery. He said that while currently there is a gap in capacity utilisation in India and there is slack in the economy, he did not see any sign of stagflation.
During the monetary policy press conference on August 6, RBI deputy governor T Rabi Sankar had said that the central bank would come out with a mode for operations of fiat digital currency by the end of the year. A fortnight before the monetary policy, Sankar had said that every central bank in the world was likely to launch a digital currency and said the time for them is now.
Reserve Bank of India’s launch of a digital currency comes when it has mounting concerns over the rising popularity of cryptocurrencies. Although the Supreme Court has lifted a ban on banks providing services to companies dealing in cryptocurrencies, banks are reluctant to support such businesses given their regulator’s discomfort.