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The RBI is exploring several solutions, including technological and legal provisions, to ensure anonymity in transactions undertaken via CBDC (central bank digital currency) like in the case of cash, said Deputy Governor T Rabi Sankar.
“Fundamental feature of currency, cash is anonymity. One of the reasons it is still being used in many developed countries to a large extent is because people love their privacy,” said Sankar in the press meet following the monetary policy on Wednesday.
He said that while cash may be used for the purpose of anonymity, the central bank is looking at how anonymity will work in the case of a digital currency, because the normal understanding is that any digital transaction leaves a footprint.
“We are looking at largely first technological solutions. We understand there are technologies possible to do that, we can use any one of those. It is also possible to get a legal provision to ensure anonymity,” said Sankar.
In this regard, the amendment to the RBI Act with respect to CBDC, says that currency will also include digital currency, which means that legally there is no difference in the treatment of paper and digital currency in all respects, said Governor Shaktikanta Das.
Transaction limits
“The IT department has certain limits for cash withdrawals and payments, where beyond a limit you have to give your PAN. The same rules will apply to CBDC also because both are currency,” said Das, adding that because CBDC transactions will be routed through wallets, their information will not be available to banks.
“The bank does not know. It [e-rupee] goes from my mobile to somebody else’s mobile. So, why should we create this fear psychosis [of transactions being tracked],” he said.
Das added that while the experience and feedback about the wholesale CBDC pilot is “very satisfactory” and the technology and process has by-and-large worked, there are still learnings and challenges, which RBI is working on and will deal with going ahead.
“It [retail pilot] has just started, so as we go, there will be several learning and we will try to fine-tune. Let there not be any fear psychosis that somebody would chase [transactions]. That would be unfair to the whole exercise,” he said.
The RBI has so far issued wholesale e-rupee tokens of around ₹300 crore for secondary market gilt settlements, and retail e-rupee tokens of about ₹2 crore across the first four banks engaged in the pilot., according to industry participants.
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