The former Governor of the Reserve Bank of India, Shaktikanta Das, has revealed how the digital rupee will revolutionize India’s economy as a home-grown central bank digital currency (CBDC). He reflected on the achievements made during his six years of service as he stepped down handing over the reign to Sanjay Malhotra. He also highlighted how India has embraced technology to decentralize the financial sector.
RBI Innovation Hub & Fintech Growth
On December 10, Das delivered a farewell speech at a press conference. While serving as Governor, the Reserve Bank of India (RBI) established the RBI Innovation Hub in Bengaluru. The hub was established to foster the growth of fintech and drive innovation adoption. Furthermore, the RBI laid down a regulatory sandbox where fintech companies can test their products in a live environment.
This points towards India as the lead nation in CBDC, stressing that many central banks globally are still in the discovery phase. However, the RBI has already moved to the next level, launching a pilot of the CBDC project when other countries are still debating and testing principles. This progression makes India unique from different economies and the leader in the digital currency industry.
Future of Digital Rupee
Das was quite positive about the future of the digital rupee, referring to it as the new-age currency. He believes CBDCs will likely be instrumental in defining the nature of payments within and across countries. His remarks are consistent with the RBI’s wider plan to roll out digital currencies in the Indian economy.
In November, the RBI tried to expand its cross-border payment system, offering instant payment facilities to Sri Lanka, Bhutan, and Nepal. The central bank is now considering using CBDC as the main form of settlement on this platform, with new potential counterparties in Asia and the Middle East.
CBDC Rollout Concerns
However, Das has concerns over the haste with which CBDC is being considered and suggested that the rollout should be timely. He argues that testing should be done before the social media application is rolled out nationwide. Information from the pilot programs will assist in determining the effects of CBDC on users and the country’s monetary policy for a seamless and risk-free implementation.
China’s CBDC Architect Expelled from CPC Over Crypto BriberyThis vision of the digital rupee is in line with Das’s effort to transform India’s payment mechanism and financial architecture. As part of the vision for the future, digital currency has been chosen as a key focus of the RBI. This move can lead to the transformation of the Indian economy and its place in the world’s financial systems.
