FameEX Hot Topics | Indian Central Bank Governor Reveals Efforts to Enable Offline Transfers of Digital Rupee

The Reserve Bank of India (RBI), under the leadership of Governor Shaktikanta Das, is progressing towards enhancing the functionality of its digital rupee to enable transactions without internet connectivity. This development aims to make the central bank digital currency (CBDC) as accessible and useful as cash. Governor Das elaborated on these advancements at a recent event organized by the Bank for International Settlements (BIS).

The ability to conduct offline transactions with the digital rupee signifies the RBI’s dedication to broadening the currency's adoption and improving the overall user experience. This initiative is particularly crucial in India, a country characterized by significant diversity and varying levels of internet access. Governor Das emphasized the importance of this feature, saying, "One of the key features of cash is that it works offline. We are working on making the CBDC transferable in the offline mode also."

While the RBI is committed to enhancing the CBDC, it remains wary of cryptocurrencies such as Bitcoin and Ethereum, citing concerns over their potential threat to economic and financial stability. The bank views the digital rupee as a stable and regulated alternative to the unpredictable and decentralized nature of these cryptocurrencies.

The digital rupee has been piloted with over 1.3 million customers and 300,000 merchants, providing valuable data on consumer behavior and the integration of the currency into the financial ecosystem. Despite these encouraging numbers, traditional mobile payment systems still lead the market, indicating a gradual transition period for consumer acceptance of the digital rupee.

These pilot projects are essential for the RBI in its efforts to monitor shifts in consumer behavior, particularly regarding bank deposits, and to assess the broader economic impact of the digital currency. "We need many more transactions to understand its wider economic effects, especially on monetary policy and the banking system," Governor Das stated.

Overall, the RBI's initiative to enable offline functionality for the digital rupee is a strategic move aimed at enhancing its practicality and mirroring the convenience of physical cash. This endeavor seeks to extend financial services to underserved segments of the population and positions the CBDC as a safe and stable alternative to both physical cash and the volatile cryptocurrency market. This transformational effort has the potential to significantly reshape India's digital economic landscape.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.