Digital rupee trials could start by December

The Reserve Bank of India could launch its first digital currency trial programs by December, Central Bank Governor Shaktikanta Das told CNBC.

Central banks, including those of China, Europe and the United Kingdom explore the digital currencies that would be issued by them, either to commercial lenders or directly to the public.

They are called central bank digital currencies, or CBDC – legal tender in digital form, and are essentially the online version of their respective fiat currencies. In the case of India, it would be the digital rupee.

“We’re extremely careful about this because it’s a completely new product, not just to RBI, but to the world,” Das told CNBC’s Tanvir Gill in a pre-recorded interview Thursday.

The RBI is studying various aspects of a digital currency, including its security, its impact on the Indian financial sector as well as its impact on monetary policy and the currency in circulation, according to the governor.

Das added that the central bank is also exploring the choice between having a centralized ledger for digital currency or so-called distributed ledger (DLT) technology..

DLT refers to a digital database that allows multiple participants to access, share, and record transactions simultaneously. A centralized ledger means that the database is owned and operated by a single entity – in this case, the central bank.

“I think by the end of the year we should be able – we might be able to – start our first trials,” Das told CNBC.

His deputy, T Rabi Shankar, said last month that the central bank was working on a “phased implementation strategy” for a digital currency.