The Reserve Bank of India (RBI) on Friday said it may come out with a model of central bank digital currency (CBDC) as early as the end of this year, the Deputy Governor T Rabi Sankar said. He reiterated that the Central Bank is internally evaluating the possibility of introducing a fiat digital currency, going into a slew of aspects like its scope, technology, distribution mechanism and validation mechanism.

In a July 22 speech, Sankar had said that India is also thinking for a phased introduction of a digital currency saying the time for them is now. China has already started a trial run for its digital currency, while the Bank of England and the U.S Fed Reserve are also looking at it. "It will be difficult to pin a date on it . We should be able to come out with a model in the near future, probably by the end of this year," Sankar said. In the July 22 speech, it had also mentioned that such currency is likely to be in the arsenal of every central bank going forward and setting up such a system will require a nuanced approach. Work on the central bank DC has been on for many years now, following the massive popularity gained by private cryptocurrencies like Bitcoin.

A central bank digital currency is essentially a virtual currency but it is issued by the central bank and has a sovereign backing, unlike other virtual currencies. Many central banks of the major economies are also exploring the possibility of introducing a CBDC. 

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