Reserve Bank Of India Preparing For CBDC Trial
The Reserve Bank of India (RBI) is in negotiations with fintech startups and state-controlled banks about testing a central bank digital currency (CBDC), according to a report in the local journal Moneycontrol on September 5. According to an anonymous public sector bank official, the trial could occur before the RBI launches a CBDC this fiscal year.
FIS, a financial services business based in the United States, was identified as one of the fintech companies with which the RBI is consulting. Julia Demidova, senior director at FIS, verified to Moneycontrol:
“FIS has had various engagements with the RBI… and, of course, our connected ecosystem could be extended to the RBI to experiment various CBDC options.”
On August 25, FIS announced the debut of its CBDC Virtual Lab. The company was already involved in the CBDC space, hosting conferences and roundtables on the subject.
According to reports, the RBI is in discussions with public sector banks State Bank of India, Punjab National Bank, Union Bank of India, and Bank of Baroda about participating in the trial. The government owns at least half of these banks.
The RBI has long claimed that a CBDC would be brought in, most recently stating that an Indian CBDC would be introduced in three steps in 2022 and 2023. Nirmala Sitharaman, India’s finance minister, has talked favorably about the impact of a CBDC on the country’s economic growth.
The Unified Payments Interface real-time payment system from India has been positioned as a competitor to bitcoin and, by extension, CBDCs. In addition, an RBI official stated at an IMF conference in June:
“We believe that central bank digital currencies could actually be able to kill whatever little case that could be for private cryptocurrencies.”
The central bank has been wary about cryptocurrencies, and while it is not illegal in the country, this year’s levies have put a damper on the industry.
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