wordpress blog stats
Connect with us

Hi, what are you looking for?

RBI says it needs to assess cybersecurity risks before rolling out CBDCs

India’s central bank has two types of CBDCs in the works, and the government is preparing a legal framework for them.

The Reserve Bank of India governor Shaktikanta Das believes the central bank needs to safeguard CBDCs (Central Bank Digital Currency) from risks of digital frauds and cybersecurity before rolling them out. He was speaking at a media interaction after announcing RBI’s monetary policy.

Das explained that the central bank had major concerns around fake Indian currency notes a few years ago. “Similar things can also happen when you are launching CBDC,” he asserted. Das said that the RBI will be careful and take preemptive steps to prevent fraud. He also said that the bank recognises the need for a robust system to prevent cyber attacks.

Das’s remarks are an indicator of the direction in which the central bank seems to be heading, and they seem to imply that the central bank may not be rolling out CBDCs anytime soon as it continues to address the risks afflicting digital currencies.

What is the status of the CBDC project at RBI?

RBI Deputy Governor T Rabi Shankar disclosed that the bank is working on two types of CBDCs— wholesale, and retail.

“A lot of work has been done on wholesale account-based CBDCs. The retail side of CBDC is complicated and it will take time. The first side to get ready will be released first for the pilot,” said T Rabi Shankar.

Advertisement. Scroll to continue reading.

The central bank had announced that it was working towards a “phased implementation strategy” for the introduction of its CBDC, the Digital Rupee, and examining use cases to ensure that its execution does not cause any disruption in July this year.

What is CBDC? Unlike cryptocurrency or private virtual currency (PVC) which is issued by private entities, a CBDC (same as a fiat currency) is issued by a country’s central bank and is backed by assets such as government securities. It is also exchangeable one-to-one with fiat currency.

Deputy Governor Shankar had said that developing India’s own CBDC can provide citizens with uses that any private VC can provide and which would help in retaining a public preference for the Rupee. “It could also protect the public from the abnormal level of volatility some of these VCs experience,” he said, and avoid their damaging consequences.

What has the Union government revealed in the Parliament?

“…Government has received a proposal from the Reserve Bank of India (RBI) in October, 2021 for amendment to the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form,” the Ministry of Finance had said in response to a question by Indian National Congress MP Adoor Prakash in the winter session of Lok Sabha.

Understanding the benefits of CBDCs

When asked about the purpose of the scheme, the finance ministry wrote that the CBDC will:

  • Reduce dependency on cash.
  • Higher seigniorage due to lower transaction costs (seigniorage is the profit made by a government when issuing currency, calculated as the difference between the face value of coins and production costs).
  • Limit settlement risk.
  • Provide trusted and regulated legal tender-based payments options.
  • Will not have volatility which is normally associated with private cryptocurrencies

“There are also associated risks which need to be carefully evaluated against the potential benefits,” the ministry’s response read.

Also read:

Advertisement. Scroll to continue reading.

Have something to add? Post your comment and gift someone a MediaNama subscription.

Written By

I cover several beats such as crypto, telecom, and OTT at MediaNama. I will be loitering at my local theatre and consuming movies by the dozen when I am off work.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



Looking at the definition of health data, it is difficult to verify whether health IDs are covered by the Bill.


The accession to the Convention brings many advantages, but it could complicate the Brazilian stance at the BRICS and UN levels.


In light of the state's emerging digital healthcare apparatus, how does Clause 12 alter the consent and purpose limitation model?


The collective implication of leaving out ‘proportionality’ from Clause 12 is to provide very wide discretionary powers to the state.


The latest draft is also problematic for companies or service providers that have nothing to with children's data.

You May Also Like


Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...


135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...


Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...


By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Your email address:*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ