A central bank digital currency for retail customers could be a game-changer and should ensure better monetary transmission, State Bank of India Chairman Dinesh Khara said on Friday.
On Thursday, the central bank launched the first phase of a CBDC retail pilot with four banks and four cities. SBI is one of the four banks in the first phase. The pilot covered four cities in a Closed User Group (CUG) of participating customers and merchants.
“The RBI’s retail CBDC pilot project is a game-changer with lasting impact and should ensure better monetary transmission at lower cost,” Khara said in a statement.
He further stated that the anonymity of customers and transactions is crucial to its acceptance.
“The anonymity factor is critical to its acceptance. It collaborates, complements and refines popular currency architectures, while also incubating further innovations,” Khara added.
RBI has created a digital currency of Rs 1.71 crore for the four participating banks as per the engagement. As demand from banks increases in the coming days, the central bank will create more digital rupees.
Four banks will join the pilot later – Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank. The pilot will be extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Cochin, Lucknow, Patna and Shimla.