Mumbai: Reserve Bank of India (RBI) on Friday released a concept note on Central Bank Digital Currency to generate awareness regarding digital currency and planned features of the digital rupee.

The concept paper explains the objectives, choices, benefits, and risks of issuing a central bank digital currency in India. It also seeks to explain central bank’s approach towards introduction of the digital currency.

On September 20, RBI Governor Shaktikanta Das said the RBI is working on a phased roll out of the digital currency and plans to introduce it to the wholesale segment before retail. Now, RBI said it will soon commence pilot launches of digital rupee for specific use cases.

In the concept note, Central Bank Digital Currency is referred as e-rupee (digital Rupee). RBI has been exploring the 'pros and cons' of the introduction of the central bank digital currency for some time, it said. Depending on different use cases, the RBI will test multiple technological options and the final architecture will be decided based on the outcomes.

Since CBDCs are a digital form of sovereign currency, they should have all the features of physical money. The way CBDC is made depends on what it is supposed to do, and how it is made affects payment systems, monetary policy, and the structure and stability of the financial system. One of the most important things to think about is how to make CBDCs as quiet as possible.

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