Indian Central Bank is Launching Retail and Wholesale CBDC

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  • Reserve Bank of India released a 50-page concept note for CBDC launching.
  • The country will establish a retail and wholesale CBDC to simplify transactions.
  • The Indian crypto community does not find this development a welcoming idea.

The Reserve Bank of India (RBI), through its Fintech Department, released a 50-page concept note for launching a central bank digital currency (CBDC) last Friday. In the report, the country looks forward to establishing a retail CBDC for individuals and businesses and a wholesale CBDC to simplify interbank transactions.

However, the Indian crypto community does not find this development a welcoming idea. A Twitter user who posed as a qualified film director argued that the crypto industry would likely suffer when the RBI introduced the CBDCs. Some others criticized the research, noting that CBDCs move the nation closer to a surveillance state.

Nonetheless, the bank intends to make the retail CBDC akin to physical banknotes. However, it will probably use an account-based structure for the wholesale CBDC, where owners are identifiable by transaction records rather than holding digital tokens, to establish a reliable system resistant to double-spending.

Previously, the Indian Finance Minister Nirmala Sitharaman indicated that a digital rupee would be released sometime in 2022 or 2023 using blockchain technology and other methods. Interestingly, the Indian central bank does not believe blockchains’ distributed ledger technology (DLT) can deliver the necessary transaction throughput for extensive jurisdictions. Instead, it considers DLT a component of a CBDC architecture that combines centralized and decentralized features.

Furthermore, the paper states no specific date for the CBDC official launch. While reiterating the risks that cryptocurrencies pose to the financial system’s stability, the RBI believes CBDC is a “risk-free central bank digital money” that will give users the same experience as dealing in currency in digital form.

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