The Reserve Bank of India could launch its first digital currency testing programs by December, Central Bank Governor Shaktikanta Das told CNBC.
Central banks, including those in China, Europe and the UK examine digital currencies that would be issued by them, either to commercial lenders or directly to the public.
They are known as central bank digital currencies or CBDC – legal tender in digital form and are essentially the online version of their respective fiat currencies. In the case of India, that would be the digital rupee.
“We are being extremely careful with it because it is a completely new product, not just for RBI, but worldwide,” Das told CNBC’s Tanvir Gill in a recorded interview on Thursday.
The RBI is studying various aspects of a digital currency, including its security, the impact on India’s financial sector, and the impact on monetary policy and the currency in circulation, the governor said.
That added that the central bank is also considering the choice between a centralized ledger for the digital currency or something called distributed ledger technology (DLT)..
DLT refers to a digital database that enables multiple participants to access, share and record transactions at the same time. A centralized ledger means that the database is owned and operated by a single entity – in this case the central bank.
“I think by the end of the year we should be able – we might be able – to start our first attempts,” Das told CNBC.
His deputy, T Rabi Shankar, said last month the central bank was working on a “phased implementation strategy” for a digital currency.