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FameEX Hot Topics | India's Central Bank Governor Announces Work on Offline Transferability of Digital Rupee

2024-05-08 16:48:20

India’s central bank, the Reserve Bank of India (RBI), led by Governor Shaktikanta Das, is advancing the functionality of its digital rupee to operate independently of internet connectivity. This enhancement is aimed at increasing the utility and accessibility of the central bank digital currency (CBDC), making it comparable to cash transactions. Governor Das discussed these developments at a recent event hosted by the Bank for International Settlements (BIS).


The initiative to enable offline transactions with the digital rupee underscores the RBI's commitment to fostering broad-based adoption and improving the user experience of its CBDC. This move is particularly significant for India, a country with a vast and diverse population where internet connectivity can be inconsistent. "One of the key features of cash is that it works offline. We are working on making the CBDC transferable in the offline mode also," stated Das during the event.


While the RBI is enhancing the CBDC, it maintains a cautious stance towards cryptocurrencies like Bitcoin and Ethereum, viewing them as potential risks to economic and financial stability. The central bank’s efforts to develop a controlled, stable alternative come in contrast to the highly volatile and decentralized nature of cryptocurrencies.


The digital rupee's pilot projects, which have already included over 1.3 million customers and 300,000 merchants, offer insights into consumer behavior and the currency’s integration into the financial system. Despite these numbers, traditional mobile payment systems continue to dominate the market, indicating that consumer adaptation to the digital rupee may require time.


These pilot projects are critical for the RBI as they navigate changing consumer behavior concerning bank deposits and evaluate the broader economic implications of the digital currency. "We need many more transactions to understand its wider economic effects, especially on monetary policy and the banking system," Das noted.


In summary, the RBI's focus on making the digital rupee functional without internet access is a strategic move to enhance its practicality, mirroring the convenience of cash. This effort not only aims to bring financial services to underserved populations but also positions the CBDC as a secure alternative to both cash and volatile cryptocurrencies, potentially transforming India’s digital economy landscape.


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