RBI is Developing Two Variants of CBDC

RBI is developing a Retail CBDC and a Wholesale CBDC.

On Wednesday, the Reserve Bank of India (RBI) Governor, Mr. Shaktikanta Das revealed that the central bank is working towards the creation of two versions of Central Bank Digital Currency (CBDC).

During a media interaction, he was asked about the current status of the electronic currency.

RBI officials explained that they are working on a two-tiered CBDC. One is a Wholesale CBDC and the other is a Retail CBDC.

Wholesale CBDC is used by financial institutions with bigger transaction sizes. On the other hand, Retail CBDC is used to make retail payments by any individual.

A substantial amount of development has been made in the Wholesale variant.

However, the Retail CBDC hasn’t been developed at the same scale because of the difficulties arising out of the intricacies of retail payments. 

Since CBDC will be the electronic version of the paper currency, it will have different currency concerns such as regarding cybersecurity and digital frauds.

Along with that, CBDC will impact consumer behaviour will and the banking sector. These impacts will be assessed by RBI as they go along.

A robust system will be needed to address these concerns.

India’s monetary landscape is quickly evolving. Today, Unified Payments Interface (UPI) is the largest retail payment system in the country in terms of the volume of transactions. It testifies India’s readiness for a digital currency.

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