Summary of RBI Concept Note on Central Bank Digital Currency (07/10/2022)

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    Reserve Bank defines CBDC as the legal tender issued by a central bank in a digital form. It is the same as a sovereign currency and is exchangeable one-to-one at par (1:1) with the fiat currency9. While money in digital form is predominant in India—for example in bank accounts recorded as book entries on commercial bank ledgers—a CBDC would differ from existing digital money available to the public because a CBDC would be a liability of the Reserve Bank, and not of a commercial bank.

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    Issuance of Concept Note on Central Bank Digital Currency

    The Reserve Bank of India has today released a Concept Note on Central Bank Digital Currency (CBDC) for India.

    The purpose behind the issue of this Concept Note is to create awareness about CBDCs in general and the planned features of the Digital Rupee (e₹), in particular. It explains the objectives, choices, benefits, and risks of issuing a CBDC in India. The Note also seeks to explain Reserve Bank’s approach towards introduction of the CBDC.

    The Concept Note also discusses key considerations such as technology and design choices, possible uses of Digital Rupee, issuance mechanisms, etc. It examines the implications of introduction of CBDC on the banking system, monetary policy, financial stability, and analyses privacy issues.

    The Reserve Bank will soon commence pilot launches of e₹ for specific use cases. As the extent and scope of such pilot launches expand, RBI will continue to communicate about the specific features and benefits of e₹, from time to time.

    (Yogesh Dayal)   
    Chief General Manager



    1-Bank of England: Discussion Paper Central Bank Digital Currency Opportunities, challenges and design March 2020; (

    2-PWC: Central Bank Digital Currency in the Indian context (September 2021); (

    3-BIS: Central bank digital currencies: financial stability implications September 2021; (

    4- PwC CBDC Global Index, 1st Edition, April 2021,

    5-Central bank digital currencies: foundational principles and core features (


    Central bank digital currencies: foundational principles and core features (BIS)

    Central banks have a mandate for monetary and financial stability in their jurisdictions and, explicitly or implicitly, to promote broad access to safe and efficient payments. A core instrument by which central banks carry out their public policy objectives is providing the safest form of money to banks, businesses and the public – central bank money.

    This money acts as a means of payment, unit of account and store of value for a jurisdiction. A
    common unit of account is a public good that allows goods and services to be exchanged and financial transactions to be settled efficiently and safely. Today, central banks provide money to the public through cash and to banks and other financial companies through reserve and settlement accounts. In this way, some of the smallest and largest payments in an economy are carried out using central bank money. Yet the ongoing digitalisation of the economy is changing the way people pay. The use of cash, currently the only form of central bank money available to the public, is falling in many jurisdictions. The Covid-19 pandemic may be accelerating this trend. Taking cash’s place is private digital money and alternative payment methods.

    Many central banks’ public policy objectives have remained broadly unchanged for the last
    hundred years. Yet the significant changes of that period have required central banks to innovate and evolve in how they met their objectives. A potential further evolution being considered is through issuing a new form of money: central bank digital currency (CBDC). A recent survey found that 80% of central banks are engaged in investigating CBDC and half have progressed past conceptual research to experimenting and running pilots . To coordinate and consolidate some of this work, the central banks of Canada, Japan, Sweden, Switzerland, the United Kingdom and the United States have come together, along with the European Central Bank and the Bank for International Settlements. This report summarises where they collectively stand.

    Arguments for and against issuing a CBDC and the design choices being considered are driven
    by domestic circumstances. There will be no “one size fits all” CBDC. Yet domestic CBDCs would still have international implications. Cooperation and coordination are essential to prevent negative international spillovers and simultaneously ensure that much needed improvements to cross-border payments are not overlooked.

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