In February, India’s Finance Minister announced plans to issue a central bank digital currency (CBDC) by March 2023. Today the Reserve Bank of India published a concept paper outlining its motivations and current approach to a digital rupee.
The central bank is planning both a wholesale (interbank) CBDC to settle securities transactions and a general purpose (retail) CBDC for the public. Currently, it intends the wholesale CBDC to be account-based, whereas the retail CBDC will be token-based.
While there are multiple motivations for issuing a digital rupee, the number one goal is to reduce the costs of physical cash management. During the last financial year, the cost of printing and security of cash issuance amounted to almost Rupee 5 billion ($603 million) and was nearly a fifth higher than the previous year.
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