RBI to implement central digital currency in phases

The Reserve Bank of India (RBI) is keeping a close watch on the benefits and risks associated with innovative products and wants to implement the Central Bank Digital Currency (CBDC) in a phased manner for the wholesale and retail segments, said a top official of the central bank. The CBDC will be a sovereign-backed digital currency.

Passage of the Finance Bill 2022 has enabled RBI to conduct a pilot and subsequent issuance of CBDC, RBI executive director (fintech) Ajay Kumar Choudhary said while delivering a keynote address at ‘PICUP Fintech Conference & Awards’ by industry association FICCI on Wednesday.

Choudhary said the RBI has fostered innovation and it is keeping a close eye on the benefits and risks associated with innovative products and services offered by fintechs. “The challenge for policymakers is to maximise the benefits of fintech while minimising the potential risk.”

Punjab National Bank managing director Atul Kumar Goel said banks have recognised the importance of collaboration with emerging fintech. “Banks and fintech companies are not competitors.”

The Reserve Bank had in May said it adopted a graded approach towards the launch of central bank digital currency in the country to ensure that the move conforms with the objectives of monetary policy and financial stability.