The central bank said that the offline feature would also help to create digital footprints of the unbanked population in the financial system, facilitating easy credit availability.
One of the interesting applications for which the central bank aims to use a digital currency is programmability. “CBDCs have the possibility of programming the money by tying the end use. For example, agriculture credit by banks can be programmed to ensure that it is used only at input store outlets. Similarly, for MSMEs etc., that may take care of the issue of diversion of funds and further financial inclusion,” said the concept note.
The note said that the CBDC could also be used for real-time cross-border transactions as there were projects like the Multiple Central Bank Digital Currency Bridge Project and Project Dunbar, which bring together the CBDCs of different countries.
On the issue of anonymity, the concept paper calls for a design that will erase all trails of low-value transactions. “Clearly, the degree of anonymity would be a key design decision for any CBDC. In this regard, reasonable anonymity for small value transactions akin to anonymity associated with physical cash may be a desirable option for CBDC-Retail,” said the note.
“Supported by state-of-the-art payment systems of India that are affordable, accessible, convenient, efficient, safe and secure, the Digital Rupee (e?) system will further bolster India’s digital economy, make the monetary and payment systems more efficient and contribute to furthering financial inclusion,” the paper said.