India is all set to follow a “graded approach” for issuing a central bank digital currency, as per a report from News18, a local media house. The Reserves Bank of India (RBI) released its annual report on Friday, May 27, stating the same. 

India to bring CBDC soon

The Reserve Bank of India is all set to bring its central bank digital currency, or CBDC, months after the authorities revealed their plans to do so. The CBDC must match India’s monetary policy objectives, financial stability, and efficient operations of currency and payment systems. 

“The Reserve Bank is engaged in the introduction of a central bank digital currency (CBDC) in India. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability, and efficient operations of currency and payment systems,” said the Annual Report on the Working of the Reserve Bank of India 2022.

The report also stated that RBI wants to propose “a graded approach to the introduction of CBDC,” which means that the central bank of India wants to go “step by step through stages of Proof of Concept, pilots and the launch.”‘

The annual report also added that “the appropriate design elements of CBDCs that could be implemented with little or no disruption are under examination.”

RBI welcomes an innovation hub

The RBI also welcomed the Reserve Bank Innovation Hub (RBIH), a wholly-owned subsidiary of the Reserve Bank, as per the annual report. The RBIH will have an independent board with eminent members from industry and academia. The headquarters of the RBIH will be in Bengaluru, India.

“To foster innovation in a sustainable manner and through an institutional set-up, the Reserve Bank Innovation Hub (RBIH) was set up as a wholly-owned subsidiary of the Reserve,” said the Reserve Bank of India Annual Report.