Blockchain for Banking News

India expands wholesale CBDC trials to explore business models

digital rupee currency cbdc

Yesterday, the Reserve Bank of India (RBI) shared information about the evolution of its wholesale central bank digital currency (CBDC) trials which started on November 1 last year. The initial use case was to use the wholesale digital rupee to settle government bond transactions, but the RBI is keen to try different business models and use cases.

Examples of the use cases planned include money market funds and short term lending, such as call money.

“We want to have as many use cases as possible. We will try account-based CBDC (central bank digital currency). We hope to launch that. That pilot, it was not intended to move banks and others away from (the) existing NDS-OM (Negotiated Dealing System – Order Matching) system that is there,” said RBI Deputy Governor T. Rabi Sankar speaking on the sidelines of the G20 summit, as reported by Informist.

Given commercial banks already have accounts with the central bank, most wholesale or interbank CBDCs have focused on token-based digital currency, particularly to settle blockchain-based transactions. And the use cases mentioned will use distributed ledger.

However, the central bank is still very much in the experimentation phase. “Everything will change,” said Sankar. “There are various technologies we want to try out, various business models we want to try out.”

Teething problems with the CBDC trial have been ironed out, but Informist reported that the volumes in the wholesale pilot have tailed off since launch. There were no transactions on Monday through Wednesday this week, followed by seven on Thursday. 

Turning to India’s retail digital rupee trials, we reported earlier this month that there were 50,000 end users in the program. Next quarter the goal is to reach 500,000 and expand the current eight banks to most of the major ones.

Meanwhile, at yesterday’s G20 meeting of deputy central bank governors, crypto-assets were discussed in a closed-door session. CBDCs didn’t get much airtime, according to Money Control. A key topic of conversation is the linkage between Singapore’s PayNow digital payment system and India’s UPI, which was unveiled earlier this week.

Image Copyright: moovstock / 123rf