Having achieved a significant milestone in December 2023 by recording 10 lakh transactions per day, the Reserve Bank of India (RBI) is actively shaping the future of digital transactions. This explainer delves into the current status, challenges faced, and the promising prospects of India’s retail Central Bank Digital Currency (CBDC), shedding light on the RBI’s strategic efforts to enhance efficiency, tackle scalability issues, and extend accessibility even to remote areas with limited internet connectivity.
What is the current status of India’s retail CBDC?
As of now, the Reserve Bank of India (RBI) has achieved a notable milestone in December 2023, reaching 10 lakh CBDC-R transactions per day. However, transaction volumes have slightly settled below this peak level.
Why have the transaction volumes seen a decrease?
The adjustment in transaction volumes is attributed to the RBI’s efforts to address scalability issues related to technology and ensure that banks can effectively handle the increased demand for retail CBDC transactions.
What is the focus of the RBI on the retail side of CBDC?
The RBI emphasises not only on transaction volumes but also on the efficiency of the technology, how systems cope with the demand, and understanding user behaviour. Behavioural variables in currency usage are recognised as evolving gradually over time.
How is the RBI addressing connectivity challenges in remote areas for CBDC adoption?
The RBI is actively exploring offline solutions to promote CBDC adoption in regions with limited internet connectivity. Various offline methods, both proximity and non-proximity-based, are being assessed to address challenges related to internet access. These solutions will be implemented gradually through pilot programs.
What are the prospects of retail CBDC in India moving forward?
The prospects seem promising as the RBI continues to refine the technology, address scalability issues, and adapt to user behaviours. The focus on offline solutions reflects a commitment to expanding CBDC accessibility, especially in areas with limited connectivity. The retail CBDC could play a crucial role in enhancing financial inclusion and stability in the Indian economy as the technology matures.
