The Reserve Bank of India may begin trials on a central bank digital currency by December, one of its governors said.
India’s central bank may begin trials of a digital currency as soon as December, Reserve Bank of India Governor Shaktikanta Das told CNBC on August 27.
Central bank digital currencies are essentially government-issued stablecoins that are legal tender — the same as a paper currency. The United States is beginning to study issuing a CBDC, as are the EU, U.K. and several Asian countries.
However, China is far ahead of all other major economies, having successfully tested a digital yuan renminbi with large-scale consumer lotteries for more than a year. The Bahamas, however, already has a CBDC in place — The Sand Dollar.
“I think by the end of the year, we should be able to — we would be in a position, perhaps — to start our first trials,” Das told CNBC. “We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally.”
The RBI will study the security of a digital rupee carefully, Das said. India needs to ensure a digital rupee cannot be counterfeited.
The central bank is also examining “what impact it will produce on the financial sector, what impact it will have on monetary policy, what impact it will have on currency in circulation, we are examining all those aspects,” Das said.
U.S. Embraces Digital Dollar
After several years of calling a U.S.-issued CBDC unnecessary, the government began taking the idea of creating a digital dollar seriously this year.
In February, Federal Reserve Chairman Jerome Powell called the digital dollar a “high priority project,” and promised 2021 would be “an important year” for its creation.
That month, Treasury Secretary Janet Yellen spoke positively about the potential benefits of a digital dollar, saying it could mean “faster, safer and cheaper payments.” However, she also expressed serious concerns about a CBDC’s possible impact on banks, financial stability, and money laundering.
