India’s digital rupee has so far demonstrated little benefit, the nation’s bankers say.
In a report from Reuters published Thursday (Dec. 1), seven bankers said that using the Reserve Bank of India’s (RBI) digital currency was very similar to the internet-based banking users were already using happily.
The news comes as the RBI is launching the latest phase of its attempt to explore the feasibility of a central bank digital currency (CBDC). This stage of the test will measure “the robustness of the entire process of digital rupee creation, distribution, and retail usage in real-time,” the central bank said earlier this week.
The bank launched a wholesale version of the test last month. Bankers tell Reuters they’ve been using the CBDC for settlements with each and seeing no benefit.
In fact, they’ve noticed what they say is a downside: each trade using it needed to be settled individually, while trades in the existing interbank payment could be handled in bulk.
“There is no advantage over internet-based transactions and the lack of netting is actually a big drawback,” said an executive at a private bank that took part in the wholesale pilot.
This has led bankers — who say they had been enthusiastic about a CBDC at first — to wonder if they’ll keep doing so.
“I don’t think once the pilot is concluded, without any RBI pressure, banks will want to use it,” one banker told Reuters.
PYMNTS has reached out to the RBI for comment.
India’s CBDC tests are among a number of efforts by central banks around the world to examine the use of digital currencies.
Last week saw news that the Bank of Japan would begin experimenting with a digital currency next year with the assistance of three of that country’s banks. The tests, set for the spring of next year, will see the central bank team with private lenders and other organizations to find out if there are issues connected to bank deposits and withdrawals.