CBDC is different from the Unified Payments Interface, the governor said. (Representative)
Bombay:
RBI Governor Shaktikanta Das, who claims that the newly introduced central bank digital currency leaves no trace in a bank, said today there is no need to create an “anxiety psychosis” in people’s minds due to privacy concerns.
The pilot with the central bank digital currency (CBDC) for wholesale has been very satisfying, and the RBI is eager to learn from and implement the ongoing pilot for the retail CBDC, Shaktikanta Das told reporters at the press briefing following the policy here.
Shaktikanta Das answered a question about possible raids by agencies such as the Enforcement Directorate in the future because the CBDC does not have the anonymity that paper currency offers, saying that one should not worry about privacy issues. “Let’s be clear, when you pay banknotes to another person … here too, by the way, let me say, you can’t find out because the information is not available to the bank. The bank doesn’t know,” Shaktikanta said tie.
“It (CBDC) goes from my cellphone to someone else’s cellphone. So why create this anxiety psychosis?” he asked.
“The Income Tax Department has certain limits for cash payments… (for) withdrawals above a certain limit you must provide your PAN card number. The same rules apply in the case of CBDC, also because both are currency,” he is noted.
Many experts, including former RBI Governor D Subbarao, have expressed concerns about the privacy aspect of CBDC. Deputy Governor T Rabi Sankar appeared to acknowledge privacy concerns on Wednesday, but was quick to add that the central bank is looking for solutions to bring the CBDC on par with paper currency when it comes to having the key feature of anonymity that has ensured that cash is still used in the developed world.
“How to ensure anonymity in the case of a digital currency, because the normal understanding is that anything that leaves a footprint digitally can have different solutions,” said T Rabi Sankar. The RBI is looking at a technological solution as well as a legal solution to address concerns about this issue, he added. T Rabi Sankar further said that the authorities will create the foundation by introducing the currency, then depend on the private sector to innovate and launch different use cases for the same.
Both Shaktikanta Das and T Rabi Sankar explained that the CBDC is different from the Unified Payments Interface (UPI), which works through a link to someone’s bank account.
(Except for the headline, this story has not been edited by DailyExpertNews staff and is being published from a syndicated feed.)
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