India's Central Reserve Bank (RBI) is reportedly preparing to launch a central bank digital currency (CBDC) later this year. Many financial institutions around the world, including the UK, China, and Korea, are already preparing for CBDC.
RBI Governor Shaktikanda Das said that RBI will launch its first digital currency pilot program in December. CBDC is a fiat currency in digital form, which in India would be the digital rupee. RBI is said to be currently studying various aspects of digital currencies, including security, impact on the Indian financial sector, monetary policy and circulating currencies.
RBI Governor says central banks are at a crossroads between a centralized ledger for digital currencies or a distributed ledger technology (DLT). DLT refers to a digital database that multiple participants can access, share, and record simultaneously. In the case of a centralized ledger, the central bank owns and operates the database.
Several central banks have been researching digital currencies over the past year as cash use declines and interest in cryptocurrencies such as Bitcoin increases. The People's Bank of China is already conducting real-world trials in several cities, and the European Central Bank and the Bank of England are also exploring the Digital Euro and UK CBDC respectively.