India’s digital rupee may not use blockchain technology

The Finance Minister of India, Nirmala Sitaraman announced that the central bank will launch its blockchain-based central bank digital currency before March 2023. However, the executive director of RBI, T Rabi Sankar, has said that the central bank is also open to other technologies. 

He said that the technology choices are open and the bank is open to trying out all possible technologies, depending on the more appropriate use case. The RBI Governor, Shashikant Das has also said that the whole process is being done carefully and they don’t want to rush into it. The exact timeline for the rollout is still not revealed by the RBI, but it is expected to get launched by March 2023. 

At present, Blockchains are the only type of distributed ledger technology. It is considered to be permissionless in most cases, but the central bank would need a permission system for its CBDC to prevent its competitors from peeking at their liquidity strategies.

The digital rupee is expected to work in the same way as paper money. The only difference will be their physical and digital presence. It will also come under the preview of the central bank.