Wallet-to-wallet transactions of the central bank digital currency (CBDC) in the retail segment are anonymous since these transactions are not reflected in the core banking system of banks, reported Business Standard.
This feature is expected to boost customer confidence to use the digital rupee in India.
On December 1, the pilot project for testing the digital currency was kicked off by the Reserve Bank of India (RBI), in which four banks are participating across four cities — Mumbai, New Delhi, Bengaluru, and Bhubaneswar.
In the first three days of the pilot, around 2,000 transactions took place and volumes are expected to pick up further this week, bankers said.
The RBI has created ₹1.71 crore worth of digital rupee for the pilot, which is expected to expand; four more banks, along with their customers, are set to join the pilot in the next two-three weeks. The central bank’s target is to involve 50,000 merchants and customers in the next few days.
According to people familiar with the retail pilot, when a bank transfers the digital cash to a CBDC wallet, that transaction is recorded in the CBS — as it is similar to when a person withdraws money from the bank.
Later when transactions are made from one CBDC wallet to another, this leg of the transaction is not recorded in the core banking solution (CBS) of the bank, and remains anonymous — the same as physical cash, that is, when a customer spends the physical money in a grocery shop or in any other merchant establishment, such transactions do not have any trail.