BackRBI says digital currency transactions to stay largely anonymous
The RBI has not yet clarified the degree to which CBDC transactions will be anonymous, though the income tax department allows cash transactions upto a certain limit
PremiumTransactions through central bank digital currencies (CBDCs) would remain anonymous ‘to a certain degree’, said a top official of Reserve Bank of India. The pilot project CBDC or e-rupee, started from November 1.
The scope of CBDC or e-rupee has been expanded to include consumers and retailers-led transactions from December 1. Earlier, it was to be used by banks for settlements with each other
The RBI has begun experiments on both the wholesale and retail versions of e-rupee using blockchain distributed-ledger technology, as an alternative to cash.
"It is possible to get a legal provision to ensure anonymity," deputy governor of Reserve Bank of India, T Rabi Sankar said in a post policy media briefing on Wednesday.
"What exactly will happen will depend on how things evolve, but anonymity is a basic feature of currency and we will have to ensure that (with CBDCs)," Sankar added.
The RBI has not yet clarified the degree to which CBDC transactions will be anonymous, though the income tax department allows cash transactions upto a certain limit to be carried out without furnishing any government identity proof and the same rules may apply, RBI governor Shaktikanta Das said at a post policy press conference.
At present, it is mandatory to furnish a proof of Permanent Account Number, a unique 10-digit alphanumeric number issued by the Income Tax Department to taxpayers, for any deposits above 50,000 rupees ($606.00).
Bankers have raised concerns about the project saying that in its current form, they don't see any benefits of CBDCs which is similar to internet-based banking transactions.
Many of them also say that the Unified Payments Interface (UPI) instant real-time consumer payments system, that lets users transfer money between banks without disclosing account details, could be a tough competitor for retail use of e-rupee.
The central bank has, however, maintained there are differences and advantages to both, ensuring e-rupee's adoption.
"E-rupee is money, UPI is a payment method," RBI's Sankar said.
"Digital currency is like payment of cash, it is possible that two private entities can provide wallet features and money can move in between them. That is not possible with UPI which has to be from one bank to the other," he said, adding that e-rupee provides privacy unlike UPI.
(with inputs from Reuters)
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