India is reportedly moving forward with the next few stages of its planned digital rupee pilot. This would add programmability and offline payment capability, according to a recent update.
Like most major economies across the globe, India has been testing a retail CBDC or central bank digital currency since early last year. The new digital currency would aim to enable person-to-person and person-to-merchant transfers, recently reaching the million transactions per day milestone.
The Reserve Bank of India (RBI) is now reportedy set to add programmability, allowing for transactions for specific and targeted purposes / use-cases.
During a recent press conference, RBI officials have shared the example of a business programming specific expenditure like business travel for company workers.
When asked about the potential impact on fungibility, deputy governor T Rabi Sankar used a different scenario / example: a school awards a pupil funds to acquire textbooks at a local store. These funds are not not fungible for a period however they become fungible again once received by the book store.
The RBI is also expected to test offline functionality, a vital consideration in order to ensure that the digital Rupee / CBDC works in regions with limited internet connectivity. Several different pilots are expected test various options in multiple locations including mountainous areas.
It’s worth noting that similar digital currency pilots have been carried out in many other countries for at least the past 10 years. However, there are not too many positive reports of the feasibility and usefulness of these so-called CBDCs. But China appears to have taken the clear lead when it comes to developing and introducing at CBDC at a massive scale.
And as we move further into 2024, it is expected that many other nations will announce key updates to their CBDC initiatives. But it still remains to be seen whether these state-backed digital currencies will be useful to a country’s individual consumers are businesses.
It would also seem that CBDCs have been inspired to some extent by the launch of Bitcoin and other forms of decentralized currencies. However, BTC and other cryptos offer better value to the consumers because anyone can transact with them, without requiring approval from centralized authorities or needing to involve a trusted third-party to finalize transfers.