Quick Take:

• Reserve Bank of India aims to enable offline usage of its digital currency, Governor Shaktikanta Das announces.
• India’s CBDC pilot sees significant adoption with 1.3 million customers and 300,000 merchants.
• CBDC usage reaches 1 million transactions daily, but mobile payments remain popular, Das reveals.
• Objective of CBDC pilots is to study consumer behavior and wider economic impacts, especially on monetary policy and banking.
• Mitigating risks, CBDCs are designed as non-remunerative and non-interest bearing, Das reassures.
• While CBDCs enhance transaction efficiency, concerns about data privacy and cybersecurity persist.

Reserve Bank of India (RBI) Governor Shaktikanta Das announced plans to introduce offline access for the country’s digital currency, aiming to replicate the convenience of cash transactions. Speaking at a Bank for International Settlements event, Das emphasized the importance of ensuring accessibility without internet dependency for the central bank digital currency (CBDC).

India stands out among economies experimenting with CBDCs backed by a central bank, having expanded its digital currency usage on a pilot basis. With over 1.3 million customers and 300,000 merchants participating in the pilot, daily CBDC transactions have reached 1 million. However, despite this progress, instant mobile payments remain the preferred mode of transaction for many users.

Das highlighted that the primary goal of CBDC pilots is to observe shifts in consumer behavior regarding bank deposits and assess broader economic implications, particularly on monetary policy and the banking sector. To address concerns about potential risks such as bank disintermediation, CBDCs are designed as non-remunerative and non-interest bearing.

While CBDCs offer the central bank opportunities to leverage new technologies for more efficient transactions and payments, challenges related to data privacy and cybersecurity persist as significant hurdles for a full-scale launch. The RBI’s cautious approach mirrors global sentiment, with many countries conducting CBDC pilots but only a few, including Jamaica, the Bahamas, and Nigeria, having fully launched digital currencies to the public.