RBI Guv Shaktikanta Das lauds the launch of digital Rupee, calls it is 'landmark'

Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday said that the trial launch of central bank digital currency is a landmark achievement. 

“Yesterday, we launched the trial of Central Bank Digital Currency (CBDC) project... It'll be a landmark achievement as far as the functioning of the entire economy is concerned. Reserve Bank is among the very few central banks in the world which have taken this initiative”, the governor said at an event on Wednesday.  

The RBI launched the pilot program of its digital currency on Tuesday in the Digital Rupee - Wholesale segment (e₹-W), allowing a few select banks to explore it for settling secondary-market transactions in government securities. The nine selected banks are State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC. As per reports, banks traded Rs 275 crore of bonds on the first day using the new form of currency. The central bank has said that the retail part of the trial of e-rupee will be launched this month. 

Also read: RBI's big focus to remain on combating inflation in upcoming MPC meet: SBI Ecowrap

"Use of e₹-W is expected to make the inter-bank market more efficient. Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk. Going forward, other wholesale transactions, and cross-border payments will be the focus of future pilots, based on the learnings from this pilot," RBI has said. 

“We'll try and launch CBDC in a full-fledged manner in the near future. The retail part of the CBDC trial will be launched later this month. CBDC will be launched in a full-scale manner because this is something where we have to proceed very carefully”, Das said at the annual banking conference organised by Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Banks’ Association (IBA). 

Handling inflation 

Defending RBI's stand on inflation and price situation, Das also said on Wednesday that acting prematurely on inflation would have exerted a heavy cost on the economy and citizens. 

"We prevented a 'complete collapse of the economy' by keeping rates lower and stayed away from premature tightening," Das said. 

Watch: How Will RBI Explain Inflation Target Miss To GoI?

It is to be noted that the RBI has failed to contain inflation within the mandated range of 2-6 per cent for three quarters this fiscal in a row. The September inflation print meant inflation had spent 36 consecutive months - or three full years - above the medium-term target of 4 per cent. Inflation averaged 6.3 per cent in January-March quarter, 7.3 per cent in April-June quarter, and 7 per cent in July-September quarter.  

Acknowledging that the inflation target had been missed, Das said the RBI decided to support the economy by not introducing a rate hike in face of a spike in inflation. 

The central bank is set to conduct an unscheduled meeting of the MPC on November 3 under Section 45ZN of the RBI Act, which relates to ‘failure to maintain inflation target’.