RBI Governor Shaktikanta Das has announced the central bank’s intention to explore offline strategies to enhance the adoption of its central bank digital currency (CBDC), known as the digital rupee, in remote regions with limited internet connectivity.
Various offline approaches, including both proximity and non-proximity-based solutions, will be assessed in mountainous, rural, and urban settings to achieve this goal, as reported by the Press Trust of India.
Speaking during a Monetary Policy Committee review session on February 8, Das stated:
“We propose to incorporate offline functionality into CBDC-R to facilitate transactions in areas with poor or restricted internet access. These functionalities will be gradually introduced through pilot programs.”
Regarding programmability, Das mentioned that the CBDC system currently supports person-to-person (P2P) and person-to-merchant (P2M) transactions using digital rupee wallets provided by pilot banks.
The concept of launching offline capabilities was initially introduced in March 2023, when Ajay Kumar Choudhary, the RBI’s executive director, mentioned the central bank’s intention to assess CBDC’s potential for cross-border transactions and integration with legacy systems in other countries.
While the digital rupee is being evaluated for offline functionalities, existing payment platforms such as the Unified Payments Interface (UPI) already offer offline features. Siddharth Sogani, CEO of Indian blockchain analytics firm Crebaco, pointed out that CBDCs primarily aim to enhance monetary supervision and reduce cash circulation:
“Popular payment services like UPI already provide offline capabilities. CBDCs are aligned with the government’s objective to reduce cash usage. Although CBDCs offer an alternative, their main purpose is to ensure a well-monitored financial system.”
The RBI initiated a pilot of its retail CBDC in December 2022 and successfully achieved the target of one million daily transactions by December 2023.
Both developing and advanced economies typically share similar motivations for their CBDC initiatives: promoting financial stability and improving cross-border payment efficiency. However, developing nations also aspire to enhance financial inclusion through CBDCs.
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