Deputy Governor T. Rabi Sankar said the Reserve Bank of India is considering implementing a series of pilot initiatives for a potential central bank digital currency (CBDC).
The central bank is considering a “phased launch” of a digital rupee, according to the deputy governor, to enable time for essential legal modifications to the country’s foreign exchange rules.
A CBDC, according to Sankar, would limit the use of cash and shield citizens from cryptocurrency volatility. In March, the RBI released a paper outlining the benefits of a CBDC for financial inclusion as well as the negatives of boosting the cost of lending through commercial banks. While India’s government has previously expressed a desire to outright ban cryptocurrencies, the atmosphere has shifted in recent months, with evidence that the country is taking a more liberal stance and attempting to regulate the crypto sector.