CNBC reported that the Reserve Bank of India is preparing to potentially commence its first CBDC trial programs before the end of the year. In an interview, Central Bank Governor Shaktikanta Das noted that the digital rupee was currently being evaluated on several fronts, including security, impact on the financial sector and monetary policy, as well as how it would affect the currency in circulation. In terms of execution, there’s still debate on whether it would function utilizing centralized or decentralized ledger technologies.
“Last month, Deputy T Rabi Shankar noted that the RBI was looking at a phased implementation strategy. Now, we’re looking at trials beginning in the near-term. For months, China has been testing its own e-yuan in a widespread beta test across many cities. India’s entrance into this arena really highlights the importance of being among the first to market. Government officials in Western Europe and United States, as well as regional players across Asia, including Japan and South Korea, are going to have to assess the strategic implications of multiple global powers offering an digital currency,” opined Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally,” Das said in an interview with Tanvir Gill. “I think by the end of the year, we should be able to — we would be in a position, perhaps — to start our first trials.”
“India is a country which has really expanded its technological footprint over the past couple decades. For them to forge ahead so quickly really is an announcement to the world that they are going to be a major player in financial technologies moving forward. Obviously, the technology is going to have to work, and they are going to have to get the populace to buy into utilizing it once it is fully released. There’s still a lot of work to be done. But, launching before the end of 2021 is an expedited timetable that, I think, many might not have been expecting. I’m sure all eyes will continue to be on India throughout their launch,” said Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Many central banks are looking at CBDCs as a way to blunt the adoption of stablecoins and other cryptocurrencies, but there are other important considerations. CBDCs can substantially reduce the cost of cross-border payments and remittances. They will also help bring many in the currently unbanked population into the financial system for the first time. For India, in particular, these are likely going to be major drivers which will spur public interest in participating,” Gardner predicted.