Where does India stand on central bank digital currency?

Sixteen of the 90 countries in the world are in the pilot stage of central bank digital currencies

On Monday, finance minister Nirmala Sitharaman announced in Parliament that the Centre had not received any proposal to recognise bitcoin as a currency in India. Additionally, she said that the Reserve Bank of India had recommended widening the definition of “bank notes” to include central bank digital currency (CBDC).

While the cryptocurrency bill is awaited, analysis shows that India is not the only major economy developing a central bank digital currency.

Data from Atlantic Council’s database shows that 87 countries, which account for 90 per cent of the world’s GDP, are exploring a CBDC—three have already cancelled their projects. While seven countries, with Nigeria being the latest one, have launched their CBDC, 16 are in the pilot stage, and 15 are in development.

The big names in the pilot stage are China, Saudi Arabia, Sweden and South Korea. A Reuters report released in November had quoted a People’s Bank of China (PBOC) official claiming that 140 million people had opened wallets for digital yuan and $9.7 billion worth of transactions had been conducted in the digital currency till the end of October.

India, in this regard, is far behind its peers. South Africa, Brazil and Russia are in the development stage of CBDCs, whereas India, along with 39 other countries, is still in the research phase.

Atlantic council data shows that the interest in CBDCs has increased in the last three months. In April, 74 countries were at different phases of CBDC development; in November, 16 more have been added to the count. While only 1 per cent of the total countries had launched CBDC until April, nearly 8 per cent have launched CBDC. Nearly two-fifths of the world is still in the research stage.

In a 2017 white paper, The Institute for Development & Research in Banking Technology, an RBI established research institution, had discussed digitising the rupee using blockchain technology.