Indian Central Bank Launches Retail and Wholesale CBDC by CoinEdition

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Central Bank of India launches retail and wholesale CBDC
  • The Reserve Bank of India has released a 50-page concept note for the launch of the CBDC.
  • The country will establish a retail and wholesale CBDC to simplify transactions.
  • The Indian crypto community does not find this development a welcome idea.

The Reserve Bank of India (RBI), through its Fintech department, released a 50-page concept note for the launch of a central bank digital currency (CBDC) last Friday. In the report, the country looks forward to creating a retail CBDC for individuals and businesses and a wholesale CBDC to simplify interbank transactions.

However, the Indian crypto community does not find this development a welcome idea. A Twitter user who posed as a skilled director argued that the crypto industry would likely suffer when the RBI introduces the CBDCs. Some others criticized the research, noting that CBDCs bring the nation closer to a surveillance state.

Nevertheless, the bank intends to bring the retail CBDC closer to physical banknotes. However, it will likely use an account-based structure for wholesale CBDC, where owners are identifiable by transaction records rather than holding digital tokens, to establish a reliable system that is resistant to double-spending.

Earlier, Indian Finance Minister Nirmala Sitharaman indicated that a digital rupee will be released in 2022 or 2023 using blockchain technology and other methods. Interestingly, the Indian central bank does not believe that the distributed ledger technology (DLT) of blockchains can provide the transaction throughput needed for large jurisdictions. Instead, he views DLT as a component of a CBDC architecture that combines centralized and decentralized functionality.

Moreover, the document does not indicate any specific date for the official launch of the CBDC. While reiterating the risks that cryptocurrencies pose to the stability of the financial system, the RBI believes that the CBDC is a “risk-free central bank digital currency” that will provide users with the same experience as trading currencies in the form of digital.

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