Central bank digital currency: risks, challenges and design considerations for India

Central bank digital currency (CBDC) is being experimented by more than 60 central banks across the globe. Distributed ledger technology (DLT), which is the foundation for crypto currencies is considered as one of the options for implementation of CBDC. Real time payments, continued access to central bank money, financial inclusion and tracking of illicit activities are considered to be benefited by adopting CBDC. CBDC experiments conducted so far are inconclusive and no central bank has taken a decision yet to launch CBDC. This paper looks at the business and technology risks/challenges associated with CBDC implementation. This paper also recommends key design considerations for CBDC exploration in India.