MUMBAI: The Reserve Bank of India (RBI) is considering a 'phased introduction' some kind of a pilot for the country’s digital currency to be used in wholesale or retail segments.

Delivering a speech to outline the RBI’s plans, Deputy Governor T. Rabi Sankar said the phase-wise introduction of a digital currency would be necessary as it will need legal changes to be made in the nation’s foreign exchange rules and information-technology laws.

"Some progress has been made. We are likely to come out (with pilots) in the near future," Sankar said in his address while delivering a keynote address on Central Bank Digital Currencies – Is This the Future of Money?

According to the deputy governor, a full-scale launch could have an impact on the banking and the monetary system. "The idea is to start off with the models that would have minimal or no impact," he added. 

Sankar said policymakers were considering running pilot programs for the proposed central bank digital currency. Its introduction will protect people from the volatility of private virtual currencies.

There are some key issues that the RBI is studying like the scope of digital currency (wholesale or retail segments), the underlying technology (distributed ledger or centralised ledger), validation mechanism, distribution architecture (issued by RBI or banks), and degree of anonymity. 

"These are some of the issues we are looking at very closely," he added.

The RBI has been exploring the pros and cons of the introduction of digital currency for quite some time. A high-level, inter-ministerial committee had examined the policy, legal framework and recommended the launch of digital currency. 

After studying the impact of these models, the launch of general-purpose digital currencies on a population scale could be considered by central banks of countries that have implemented specific-purpose digital currency.