RBI announces offline transactions for Digital Rupee; here’s what new CBDC move means | India Business News

Feb 8, 2024

digital rupee Offline Transactions: reserve Bank of India has announced that it central bank digital currency ,CBDC) can now be programmed and used offline. Soon users will be able to conduct offline transactionseven in limited areas internet connectivity,
During the recent Monetary Policy Committee review meeting on February 8, RBI Governor Shaktikanta Das said, “The CBDC Retail (CBDC-R) pilot currently enables person-to-person (P2P) and person-to-merchant (P2M) transactions. It is now proposed to enable additional functionality of programmability and offline capability in CBDC retail. Payment, Programmability will facilitate transactions for specific/targeted purposes, while offline functionality will enable these transactions in areas with poor or limited internet connectivity.
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This step has been taken as part of RBI's initiative to increase the reach and utility of CBDC-R. Offline functionality will enable transactions in areas where internet access is scarce or unavailable. Various proximity and non-proximity-based offline solutions will be evaluated in hilly, rural and urban scenarios to ensure wide applicability.
What is CBDC?
CBDC stands for Central Bank Digital Currency, which is issued by the RBI as legal tender. It differs from traditional paper or polymer currency by existing as electronic sovereign currency. CBDCs appear as liabilities on the central bank's balance sheet and can be customized for specific needs, the ET report said. They must be exchangeable at the same value as cash.
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How can CBDC users benefit from the digital payment system?
According to the RBI website, payments made with CBDC are final, thereby reducing settlement risk in the financial system. imagine using one I am A system where CBDCs are exchanged instead of bank balances – similar to handing over cash, eliminating the need for interbank settlements. CBDCs can also enhance real-time and cost-effective globalization of payment systems.
For example, an Indian importer can pay a US exporter instantly in digital dollars without intermediaries. This transaction will be as final as if cash had been exchanged, without trusting anyone US Federal Reserve Settlement arrangements. Time zone differences will no longer affect currency settlements, will reduceHerstatt' risk.

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