The Clearing House Real-Time Payments Tracker May 2024 Banner

India Proposes CBDC That Can Function Offline

India’s central bank wants its digital currency to be available without internet access.

“One of the key features of cash is that it works offline,” Reserve Bank of India (RBI) Governor Shaktikanta Das said at a Monday (May 6) Bank for International Settlements summit. “We are working on making the CBDC transferable in the offline mode also.”

A Bloomberg News report covering the RBI governor’s comments notes that India is one of the few global economies to experiment with a central bank digital currency (CDBC) despite caution by other countries.

According to the report, Das said India expanded the use of its digital currency on a pilot basis, with at least 1.3 million customers and 300,000 merchants using it. CBDC use in India has risen to 1 million a day, although people still would rather use instant mobile payments mode.

The country has been testing both wholesale and retail CBDCs, and last year tested the use of the digital rupee in contactless payments.

“The key objective of the pilots has been a change in consumer behavior vis-a-vis bank deposits — we need many more transactions to understand its wider economic effects, especially on monetary policy and the banking system,” Das said.

And by making CBDCs as “non-remunerative” and “non-interest bearing,” any possible risk of bank dis-intermediation has been reduced, he added.

As the Bloomberg report points out, the RBI is not alone in showing caution about CBDCs. While many countries are experimenting with the currency, just three — Jamaica, the Bahamas and Nigeria — have fully offered a CBDC for public use.

Among those expressing concerns about CBDCs are Republicans in the U.S. Senate, who earlier this year introduced the “CBDC Anti-Surveillance State Act” to prevent the Federal Reserve from issuing a digital dollar. Instead, the bill would require Congressional legislation to greenlight the issuance of a CBDC.

Senators backing the bill include Ted Cruz of Texas, Bill Hagerty of Tennessee, Florida’s Rick Scott, Ted Budd of North Carolina and Indiana’s Mike Braun.

Cruz introduced similar legislation last year, contending that the federal government could use a digital dollar to track citizens.

The question of privacy also figures into the CBDC debate in Great Britain, where the country’s treasury earlier this year issued a report that said any legislation to develop a digital pound must be created with user privacy in mind.