Akash Jha
On September 10, senior central bank officials said that the Reserve Bank of India (RBI) would introduce the wholesale version of its central bank digital currency (CBDC), the Digital Rupee-Wholesale, in the call money market by the end of the month.
In a near future, “(It will be). In this coming month, we will initiate wholesale CBDC borrowing through interbank channels. The choice is yours: this month or next. We have it in testing now. Ajay Kumar Choudhary, an executive director at the RBI, remarked on the margins of the G20 Leaders’ Summit in New Delhi, “Once we are ready, we will be able to start.”
In November 2022, the RBI began testing out a wholesale CBDC, with the settlement of secondary market transactions in government securities as its initial emphasis.
To improve the efficiency of the interbank market, the use of e-W (wholesale CBDC) is advocated. “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,” the central bank said while announcing the commencement of the trial.
However, while the RBI is enthusiastic about the retail CBDC pilot project and expects daily transactions to reach 1 million by the end of 2023 (up from 20,000-25,000 in July), very few transactions have taken place in the secondary market for government securities utilizing the wholesale CBDC.
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Choudhary, however, didn’t appear bothered by the slowness, calling the wholesale CBDC’s application in the government securities market “one single piece” of the whole.
The “call money” market is still another factor. We won’t be able to maximize efficiency until we incorporate all the necessary components. At the moment, in CBDC, we are evaluating each one separately. We’ll proceed with integration once we’ve finished working on the technical, financial, and operational aspects and are comfortable with them. He emphasized that “our goal is not to test the whole thing together.”
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