The Reserve Bank of India could launch its first digital currency testing programs in December, central bank governor Shaktikanta Das told CNBC.
Central banks, including those in China, Europe and the United Kingdom they are exploring digital currencies that they would issue, either to commercial lenders or directly to the public.
They are called central bank digital currencies or CBDCs: legal tender currency in digital form, and are essentially the online version of their respective fiduciary currencies. In the case of India, this would be the digital rupee.
“We’re being very careful about it because it’s a completely new product, not just for RBI, but globally,” Das told CNBC’s Tanvir Gill on Thursday in a recorded interview.
According to the governor, the RBI is studying various aspects of a digital currency, including its security, the impact on India’s financial sector, and how it would affect monetary policy and currency in circulation.
Das added that the central bank is also exploring the choice between having a centralized ledger for digital currency or so-called distributed ledger technology (DLT)..
DLT refers to a digital database that allows multiple participants to access, share, and record transactions simultaneously. 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 to (maybe we would be able to start our first rehearsals,” Das told CNBC).
His deputy, T Rabbi Shankar, said last month that the central bank was working towards a “phased implementation strategy” for a digital currency.