Tomorrow the Reserve Bank of India is set to unveil its next wholesale CBDC (wCBDC) pilot use case. While several Indian news outlets reported plans for tokenized deposit trials, Money Control said the trial will focus on tokenizing money market instruments, specifically certificates of deposit (CDs). The wCBDC will be used for the settlement leg of the transaction.
This contrasts with tokenized deposits, where the sending token represents a conventional account deposit held by a consumer or corporate at a bank. Tokenized deposit trials usually involve the sender transferring the token to the recipient, who often receives a token of a different bank. This transfer of liabilities between banks requires a second step in which the sending bank pays the receiving bank. This second step is where a wholesale CBDC is used. However, based on the reports, we believe the new use case is simply for the settlement of CDs, a simpler use case.
The central bank first launched its wholesale CBDC trials in late 2022, but didn’t get a lot of traction when it was used for the settlement of government bond transactions. Two years ago it added another use case in the call money markets. Tokenizing CDs represents an expansion into money market instruments. Earlier this year the RBI said it expanded the call money market use case by adding more primary brokers. In March 2024 central bank statistics showed a total wCBDC balance of the equivalent of $10,000. In most cases banks are likely to switch into wCBDC only when needed. Nonetheless, the balance was tiny.
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