Digital currency will further bolster the digital economy, make payment system more efficient, reduce cost involved in physical cash management and also contribute to further financial inclusion, RBI Executive Director Ajay Kumar Choudhary said on Wednesday.
Chaudhary was addressing an outreach seminar on 'Central Bank Digital Currency: The India Story' organised by the Reserve Bank of India. The event was organised ahead of a two-day International Financial Architecture Working Group meeting of G20 slated to take place on January 30 and 31 here.
The RBI has already launched pilots of CBDC (Central Bank Digital Currency) in wholesale and retail segments last year.
Chaodhary said the CBDC is just a digital form of the physical currency and will have all its characteristics.
It is non-remunerative that is it does not carry any interest like any currency, noted Choudhary, adding, "E-rupee is also expected to offer features of physical cash like safety and settlement of transactions."
Asserting that the digital currency is aimed to compliment rather than replace the current forms of money, he said, "it should not be construed as a step to replace any of the existing bouquet of payment which are already available with us."
He said the key motivation for exploring the issuance of CBDC in India among others include moving to a digital economy, reduction in production and operation cost involved in physical cash management, which is huge even if suppose 10-15 per cent reduction, fostering financial inclusion, adding efficiency in the settlement system, boosting innovation in a cross-border payment space.
"Supported by the-state-of-the-art payment system of India that is affordable and accessible, convenient, efficient, safe and secure, the CBDC can further bolster the digital economy, make the monetary and payment system more efficient and contribute to further financial inclusion," he asserted.
He also said for future considerations, offline functionality forms is one of the fundamental considerations for the design of E-rupee as it is a defining characteristic of the physical currency.