RBI plans to include 5 more banks and another 9 cities for retail CBDC system, says Deputy Governor (2024)

FAQs

RBI plans to include 5 more banks and another 9 cities for retail CBDC system, says Deputy Governor? ›

The Reserve Bank of India (RBI) is planning to include five more banks and nine more cities in the retail Central Bank Digital Currency (CBDC) system, said central bank's Deputy Governor T Rabi Shankar in a post-monetary policy committee (MPC) press conference on February 8.

These include the State Bank of India, the ICICI Bank, the Yes Bank and the IDFC First Bank, the Bank of Baroda, the Union Bank of India, the HDFC Bank and the Kotak Mahindra Bank.

State Bank of India, ICICI Bank, IDFC First Bank, HDFC Bank and Yes Bank are among a shortlist of at least five lenders that the Reserve Bank of India (RBI) has roped in to work on the retail pilot project of the central bank digital currency (CBDC), people familiar with the matter told ET.

Will a U.S. CBDC replace cash or paper currency? The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them.

The pilot will test how banks using digital dollar tokens in a common database can speed up payments. Participating banks include BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo.

Florida has essentially banned the use of central bank digital currencies (CBDC) in the state, and its regional neighbor, North Carolina, as well as several other U.S. states, seem likely to follow soon.

CBDC is a digital form of fiat—money that is issued by central banks. It is designed to be a digital representation of the country's physical currency. Unlike cryptocurrencies like Bitcoin or Ethereum, CBDC is backed by the government and is legal tender.

What are the risks of CBDC? ›

A CBDC could undermine both the foundation and future of financial markets by reducing credit availability, disintermediating banks, and challenging the rise of cryptocurrency.

The Digital Dollar Project said its initial participants in the program are Digital Asset Holdings, Emtech, Knox Networks and Ripple. Digital Asset Holdings builds distributed ledger products for banks and other financial institutions and names Citi, J.P. Morgan, Nasdaq and Deloitte among its clients.

China is among a host of countries developing their own CBDCs - digital tokens issued by central banks - although adoption is still in its early stages. Currently, CBDCs are mostly being positioned as M0 currency, or cash in circulation.

Federal Reserve Board - Central Bank Digital Currency (CBDC)

The RBI proposes to introduce programmability and offline functionality in the CBDC pilot to enable additional use cases and transactions in areas with poor internet connectivity.

​​RBI began the pilot project wholesale CBDC and picked up nine banks -- State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, YES Bank, IDFC First Bank, and HSBC.

Reserve Bank of India (RBI) officials stated in July that 13 banks were participating in a retail CBDC pilot, launched in late 2022 and targeting the mass market, which had more than 1 million users and 262,000 merchants as of end-June.

134 countries & currency unions, representing 98% of global GDP, are exploring a CBDC. In May 2020 that number was only 35. Currently, 68 countries are in the advanced phase of exploration—development, pilot, or launch. 19 of the Group of 20 (G20) countries are now in the advanced stages of CBDC development.

Six central banks have launched a CBDC: the Central Bank of The Bahamas (Sand Dollar), the Eastern Caribbean Central Bank (DCash), the Central Bank of Nigeria (e-Naira), the Bank of Jamaica (JamDex), People's Bank of China (Digital renminbi), the Reserve Bank of India (Digital Rupee), and Bank of Russia (Digital Ruble) ...

The Bahamas, Jamaica, and Nigeria have already introduced CBDCs. And more than 100 countries are in the exploration stage. Central bankers in Brazil, China, the euro area, India, and the United Kingdom are at the forefront.