The document discusses central bank digital currency (CBDC) and its development in India. It notes that CBDC is a digital version of fiat currency controlled by a country's central bank. The Reserve Bank of India is currently researching CBDC and exploring technology options. Potential benefits include increased efficiency, security, and financial inclusion, while risks include limited digital infrastructure, cyberattacks, impact on banks, and privacy/regulatory challenges. The document outlines key considerations for developing a CBDC roadmap in India.

1. DIGITAL RUPEE
TEAM TRAID Institute of managemment technology, Hyderabad

2. Digital version of country's fiat
currency
Controlled by country's central
bank
Storage in digital
wallets
Enhances monetary policy
efficiency
Reliable & secure digital financial
transactions

3. Currently in R & D stage for
CBDC
Controlled by the Reserve Bank of
India
The RBI has set up an inter-departmental group
to study the feasibility of issuing a CBDC and to
explore the technology options available.
Enhances monetary policy
efficiency
Reliable & secure digital financial
transactions

4. Benefits
• RBI benefits from increased
efficiency and reduced costs of
monetary policy implementation,
more control over the money supply
and interest rates in the digital
currency environment.
• Consumers benefit from more secure
& efficient financial transactions.
• Benefits businesses by helping to
reduce dependence on foreign
payments & increase domestic
payment infrastructure stability.
• Governments are benefitted by
increase in financial inclusion providing
alternatives to traditional bank
accounts to unbanked people.
• Limited digital infrastructure
particularly in rural areas.
• Being unfamiliar with the digital
currency, lack of trust arises as an
issue.
• More vulnerability of CBDC to cyber
attacks posing a cyber security risk.
• Banks face a risk of disruption in their
traditional banking business model
impacting their profitability.
• Monetary policy challenges to RBI in
implementation.
• Legal & regulatory challenges of
novelty.
• Privacy and security concerns
Challenge
s

5. Access to the end users
Conduct user
research
Define Monetary policy
framework
Define the issuance process
Define the legal status of CBDC
Here are steps that could be
taken to ensure that the CBDC is
accessible to end users in India:
Developing a legal and regulatory
framework for CBDCs that takes
into account the specific context
of the Indian market will be
critical.
Here are steps that could be
taken to ensure effective liquidity
management:
Provide education &
awareness
Establish clearing &
settlement
mechanism
Establish clearing &
settlement
mechanism
Develop framework for
dispute resolution
Managing the money supply
Establish oversight & enforcement
Build a network of partners
Support multiple access points
Manage open market
operations
Monitoring the CBDC market
Test with pilot groups
Set up liquidity facilities
Design and development
Monitor & update continously
Monitor & Improve continously
Monitor the money
market
Collaborate with other central
banks
Collaborate with other regulators
Research and analysis
Consider International
standards
Design user-friendly interfaces Set up collateralized
system
Set up an issuance mechanism
Develop regulatory framework
Liquidity Management Issuanc
e
Legal & Regulatory Framework
Key considerations for the regulators while developing roadmap for
CBDC

6. There are several potential use cases for central bank digital currency (CBDC) implementation, including:
• Retail payments: One of the main use cases for CBDCs is to provide a digital alternative to cash for retail
payments. This can provide a more efficient and secure way for individuals and businesses to make
transactions.
• Financial inclusion: CBDCs can provide an alternative to traditional bank accounts for unbanked or
underbanked, which can help increase financial inclusion.
• Cross-border payments: CBDCs can facilitate cross-border payments by providing a digital alternative to
traditional correspondent banking systems. This can reduce the cost and increase the speed of cross-border
transactions.
• Monetary policy: CBDCs can provide central banks with new tools to manage the money supply and interest
rates, which can help to improve monetary policy effectiveness.
Use
Cases

7. • The underlying technology for central bank digital currency (CBDC) implementation is typically based on distributed
ledger technology (DLT), such as blockchain.
• Blockchain technology allows for a decentralized and tamper-proof digital ledger that can record and verify
transactions in a secure and transparent way.
• CBDCs can also be implemented using other types of DLT, such as Hashgraph, Directed Acyclic Graph (DAG) and
others.
• The choice of underlying technology will depend on the specific requirements and goals of the CBDC project, such as
• Scalability
• Privacy
• Security
• Interoperability with existing systems
• Legal and regulatory requirements.
• The underlying technology for CBDC implementation is a dynamic field, new developments and innovations are likely to
emerge in the future.
Underlying
Technology

8. China Singapore Hong Kong
South Korea Japan Australia
The People's Bank of China
been conducting pilot tests of
its digital renminbi in several
cities, and is expected to roll
out the digital renminbi
nationwide in the near future.
The Bank of Korea has been
researching the potential
benefits and risks of issuing a
CBDC, and is expected to
release a report on its findings
in the near future.
The Bank of Japan has been
conducting research on
CBDCs but have not yet
announced any plans to move
forward with implementation.
The Reserve Bank of Australia
(RBA) has been researching
CBDCs and have announced
that they will conduct a proof-
of-concept trial in the near
future.
The Monetary Authority of
Singapore has completed a pilot
project using a wholesale CBDC
for interbank settlements, and
is currently exploring the use of
a retail CBDC.
The Hong Kong Monetary
Authority (HKMA) is working
with the Hong Kong Association
of Banks to conduct a pilot of a
CBDC for cross-border trade
finance.
Inputs on measures taken by countries in APAC for the CBDC
development

9. China
Sweden
Europe
Canada
USA
Singapore
Bahamas
Other countries
Japan, Hong Kong, and the United Kingdom
have also been conducting research on CBDCs,
but have not yet announced any plans for
implementation.
launched a digital version of
the Bahamian dollar called
the Sand Dollar
Currently in process of testing
& evaluating the launch of
SGD
Currently in process of testing &
evaluating the launch of CBDC
Research on CBDC since 2018
and launch of pilot project in 2021
The ECB has not yet decided
whether to issue a CBDC
has been experimenting with a
CBDC called the e-krona since
2017, currently under pilot testing
has been at the forefront of CBDC development,
digital version of the Chinese Yuan (renminbi)
since 2020 in several major cities

10. Driver
s
• Financial inclusion
• Increased efficiency
• Security and reduced fraud
• Better monetary policy
• International cooperation
• Limited digital infrastructure
• Lack of trust in digital currency
• Cybersecurity risks
• Impact on traditional banking systems
• Privacy concerns
Risk
s

11. Word Document
References
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