The Reserve Bank of India (RBI) has begun thinking about doing a “phased introduction” of a central bank digital currency (CBDC), amid legal changes needed for that country’s foreign exchange and information technology rules, Bloomberg writes.
Deputy Governor T. Rabi Sankar, delivering a speech on Thursday outlining the RBI’s plans, said the introduction of a CBDC would help to protect people from volatile private digital assets.
He added that the implementation of a CBDC would also make gains toward cutting down on the use of cash in society.
He said the bank’s approach would likely involve pilot programs.
Sankar noted the increasing number of CBDCs being discussed by banks globally, with his speech in fact coming only a couple of days after the European Central Bank approved an “investigation phase” for a CBDC, which might end up leading to the creation of a virtual currency by the middle of the decade.
The ECB said the next stage would have to do with addressing issues of design and distribution.
Meanwhile, China has done trials with its CBDC in numerous cities, and some Eastern Caribbean islands that share a central bank, including Grenada, St. Kitts and Nevis, have started their own versions, Bloomberg notes.
In addition, the U.S. Federal Reserve and the Bank of England are also considering how and if they want to move forward with the issue.
A report from PYMNTS notes that the Bank for International Settlements (BIS) has been analyzing how CBDCs would work with foreign exchange payments. The BIS said banks should be focusing on interoperability and coordination between banks as they look into CBDCs. As cross-border payments are currently often fragmented and difficult, CBDCs might represent a “clean slate.” But that will only happen if there are consistent standards and coordination of designs to help avoid some of the problems currently plaguing cross-border payments.