Permanent deletion of
transactions can help make e-rupee anonymous
Governor
Shaktikanta Das on Monday said that permanent deletion of transactions can make
the e-rupee or central bank digital currency (CBDC) become anonymous and make
it at par with paper currency. Speaking at the BIS Innovation Summit, Das said
India is also working on making the CBDC transferable in the offline mode along
with introducing the programmability feature to help its financial inclusion
goals.
It
can be noted that since the introduction of the CBDC in late 2022, there have
been concerns about the privacy aspect, with some saying that the electronic nature
will leave a trail of where all the currency has been used, unlike cash which
offers anonymity.
"Anonymity
can be addressed through legislation and/or through technology. For example,
through permanent deletion of transactions," Das said.
"The
basic principle is that CBDC can have the same degree of anonymity as cash, no
more and no less," he added.
In
the past, the RBI brass, including Das and his Deputy T Rabi Sankar have said
that technology offers the solutions to such concerns on privacy.
In
the run-up to the launch of the pilot, former RBI Governor D Subbarao had in
2021 had flagged the issue of data privacy saying the CBDC will allow the
government or the RBI access to all the data on how each unit of the currency
has been used and also asked for a strong data protection law to tackle with
it.
Meanwhile,
Das reiterated that India is working on making the CBDC transferable in the
offline mode also, pointing out that one of the key features of cash is that it
does not require network connectivity to work.
In
February this year, Das announced the offline and programmability features of
the CBDC.
"Programmability
will facilitate transactions for specific/targeted purposes, while offline
functionality will enable these transactions in areas with poor or limited
internet connectivity," Das had said then.
Speaking
on Monday, Das said that despite the efforts which are being undertaken by the
Reserve Bank, the RBI still sees preference for UPI (unified payment interface)
among retail users.
"We
of course, hope that this will change going forward," he said, specifying
that the RBI has also enabled interoperability of CBDC with UPI.
India
has made CBDC non-remunerative, by making it non-interest bearing to mitigate
any potential risks of bank disintermediation, Das said, adding that the
central bank creates the CBDC and the banks distribute it.
To
widen the reach of the e-rupee, the RBI recently announced the participation of
non-banks in the pilot with the expectation that their reach can be leveraged
for distribution of CBDCs and for providing value-added services, he added.
www.economictimes.indiatimes.com dt. 07-05-2024