Permanent deletion of transactions can make e-rupee anonymous, RBI Governor

The Governor of Reserve Bank of India (RBI) stated that the permanent deletion of transactions can make the e-rupee or central bank digital currency (CBDC) become anonymous and make it at par with paper currency.

At the BIS Innovation Summit, the Governor said that India is working on developing methods to enable CBDC transferable in the offline mode along with introducing the programmability feature to help its financial inclusion goals.

the introduction of CBDC in late 2022 there have been apprehensions regarding the privacy aspect. As per a few people, the electronic nature will create a traceable record of the currency usage. But, cash offers anonymity.

“Anonymity can be addressed through legislation and/or through technology. For example, through permanent deletion of transactions,” Das said.

“The basic principle is that CBDC can have the same degree of anonymity as cash, no more and no less,” he added.

In the past, the RBI brass, including Das and his Deputy T Rabi Sankar have said that technology offers the solutions to such concerns on privacy.

Former RBI Governor D Subbarao in 2021 signaled the issue of data privacy. He said that CBDC will allow the government or the RBI access to all the data on how each unit of the currency has been used and also asked for a strong data protection law to tackle it.

Meanwhile, Das reiterated that India is working on making the CBDC transferable in the offline mode also, pointing out that one of the key features of cash is that it does not require network connectivity to work.

He also added, to widen the reach of the e-rupee, the RBI recently announced the participation of non-banks in the pilot with the expectation that their reach can be leveraged for distribution of CBDCs and for providing value-added services.