Ajay Kumar Choudhary, Executive Director of India’s central bank, the Reserve Bank of India (RBI), recently stated that the country’s central bank digital currency (CBDC) would act as an alternative to cryptocurrency. In addition, Choudhary emphasized the importance of the digital rupee possessing all the attributes of physical currency, including anonymity.
Exploring CBDC Offline Functionality
During an interview with CNBC-TV18 on Friday, Choudhary provided an update on India’s CBDC, stating that the RBI was exploring the offline functionality of the digital rupee. He also stressed that the CBDC must become a medium of exchange in India and have all features of physical currency, including anonymity. The RBI executive director had previously noted that the design of India’s CBDC would be the least disruptive and would not replace physical currency or the current financial system.
CBDC to Serve as Alternative to Cryptocurrency
Choudhary further added that the digital rupee would act as an alternative to cryptocurrencies, providing the public with a digital form of money. This statement echoes RBI Deputy Governor T. Rabi Sankar’s recent claim that the digital rupee should be able to do anything cryptocurrency can do without the associated risks of crypto.
India’s CBDC Pilot
India’s central bank began piloting its digital rupee in the wholesale sector in November and in the retail sector in December of last year. Last month, Sankar revealed that the digital rupee has over 50,000 users and is accepted by 5,000 merchants. Reliance Retail became the first retailer to accept digital rupees.
CBDC: The Currency of the Future
RBI Governor Shaktikanta Das declared in December of last year that the CBDC is the currency of the future. He explained that India’s existing instant real-time payment system, the Unified Payments Interface (UPI), relies on banks as intermediaries, whereas a CBDC functions more like physical currency notes with an automated sweep in and out feature.
RBI’s Stance on Cryptocurrency
While promoting the digital rupee, the RBI continues to recommend a complete ban on cryptocurrencies, including bitcoin and ether. Governor Das has warned that crypto poses major risks to India’s financial stability, monetary system, and cybersecurity, and could undermine the central bank’s authority.