Transactions via central bank digital currencies (CBDC) would remain anonymous “to a certain degree”, a top official at the Reserve Bank of India (RBI) said, adding that technology and legal provisions can be explore to ensure that anonymity.
India start the pilot project for its digital currency, or e-rupee, from 1st November 2022, when it was open for initial trial.
Then only being use by banks for settlements with each other, the scope of the project was expand to include consumer and retailer-led transactions from 1st December 2022.
The RBI has begun experiments on both the wholesale and retail versions of e-rupee using blockchain distribute-ledger technology, as an alternative to cash.
T Rabi Sankar, Deputy Governor of Reserve Bank of India, said in a post policy media briefing :
“It is possible to get a legal provision to ensure anonymity,”.
“What exactly will happen will depend on how things evolve, but anonymity is a basic feature of currency and we will have to ensure that (with CBDCs),”.
The RBI has not yet clarified the degree to which CBDC transactions will be anonymous, but the income tax department allows cash transactions up to a certain limit to be carried out without furnishing any government identity proof and the same rules may apply, RBI governor Shaktikanta Das said at a post policy press conference.
At present, it is mandatory to furnish a proof of Permanent Account Number, a unique 10-digit alphanumeric number issue by the Income Tax Department to taxpayers, for any deposits above Rs. 50,000.
Bankers have raise concerns about the project saying that in its current form, they don’t see any benefits of CBDCs which is similar to internet-base banking transactions.
Many of them also say that the Unified Payments Interface (UPI) instant real-time consumer payments system, that lets users transfer money between banks without disclosing account details, could be a tough competitor for retail use of e-rupee.
The central bank has maintain there are differences and advantages to both, ensuring e-rupee’s adoption.
T Rabi Sankar Said :
“E-rupee is money, UPI is a payment method,”.
“Digital currency is like payment of cash, it is possible that two private entities can provide wallet features and money can move in between them. That is not possible with UPI which has to be from one bank to the other,”.
