Reserve bank of India outlines CBDC blueprint


The RBI released a concept paper that outlined its motivation, design choices, and technological considerations for the pilot phase of the CBDC project.

Cover art/illustration via CryptoSlate

The Reserve Bank of India (RBI) is finalizing plans to kickstart the pilot phase leading to the issuance of its central bank digital currency-“digital rupee”.

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The RBI released a concept paper on Oct. 7, which outlined its motivation, design choices, and technological considerations for the pilot phase of the CBDC project.

The RBI said the digital rupee would be designed to complement, rather than replace India’s existing payment systems. While the digital rupee is not different from banknotes, it will be optimized for faster and cheaper settlements.

The country’s apex bank explained that the issuance of a digital rupee will help the Indian economy reduce operational costs involved in physical cash management, improve the efficiency of payment settlements, and boost innovation in cross-border payments.

With an offline feature expected in the CBDC, the RBI envisions that more people in remote areas limited by internet access would be able to access financial services, more easily.

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The RBI added that the CBDC will enable the public to reap the full benefit of private cryptocurrencies without undermining the financial stability of the Indian economy.

“It is the responsibility of the central bank to provide its citizens with a risk-free CBDC which will provide the users the same experience of dealing in currency in digital form, without any risks associated with private cryptocurrencies.”

For design specifics, the RBI plans to issue both retail and wholesale CBDCs. The wholesale CBDC will be for interbank transfers, while the retail version will be for day-to-day use by the public.

Given that retail CBDC is a digital version of cash, the RBI said it could be issued as a token-based, while the wholesale CBDC would be issued as account-based.

The RBI has yet to make a choice between issuing the CBDC on a centrally controlled database or on distributed ledger technology. It will, however, learn towards the option that offers stronger cybersecurity, resilience, technical stability, and governance standards.

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The RBI said it will incorporate the results of the pilot phase into the final design of the digital rupee.

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Author: Christian Nwobodo

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