The decrease in the number of transactions, says a source at the RBI, was a consequence of the cancellation of sponsorship benefits for businesses and the lack of demand for the central bank’s digital currency among Indians.
Until January 2024, the RBI sponsored a digital rupee pilot program and asked commercial banks to artificially increase the number of daily transactions to 1 million to “test the sustainability of the system at scale.”
Banks participating in the pilot project offered bonuses to customers and also paid part of the salaries of their own employees in digital rupees. Merchants were able to reduce transaction costs. Digital rupee holders were incentivized with lotteries, prize draws, increased cashback and free services.
“However, support from commercial banks has now dried up, raising questions about the future of RBI’s digital currency initiatives amid a stark contrast between the artificially inflated numbers and actual usage. We have noted that it may take more than just the development of retail CBDC technologies to drive consumer demand. Namely, income-generating instruments to increase the value of assets similar to cash,” the RBI source added.
Earlier, Reserve Bank of India Governor Shaktikanta Das said that the chief financial regulator has begun exploring an offline solution for large-scale implementation of the digital rupee in the payments and transfers market in regions without Internet access.
Source: Bits
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