In the first two weeks since its rollout, usage of central bank digital currency or CBDC has been less than expected because there are doubts over anonymity of transactions, reported Business Line.
While the banking regulator Reserve Bank of India (RBI) has said the e-Rupee transactions are anonymous, on-ground implementation is not clear over this.
One of the reasons which reportedly bust the myth of anonymity is sending of mandatory messages from transacting banks whose e-Re apps are being used for transactions.
Issuing such messages is presently mandatory under the law for any digital transaction and e-Re is no exception. “If SMS should be sent, then the bank which is issuing the message has the transaction trail. This makes e-Re pseudo-anonymous, not fully anonymous,” said a highly placed source.
To allay the concerns
The RBI is striving to address some of the concerns. A person aware of the matter said some communication from the RBI on this matter is expected soon because anonymity is one of the salient features of the recently piloted retail CBDC. Transactions into and out of the wallet are said to leave no digital trail. However, 11 days after its implementation questions are being raised on whether the digital currency is anonymous.
“RBI could be issuing a circular and/or a discussion paper to address the issue,” the source said. The regulator is keen to iron out concerns with respect to anonymity before more banks and States can be added for the pilot testing of e-Re.
Another reason for the fear of being tracked is that all rupee transactions over ₹50,000 need to be supplemented by mentioning of PAN number. And there are concerns over this mandate when a high value e-rupee transaction is being made. Also, even if wallet-to wallet transaction is not monitored, there is a record of money being transferred from bank account to wallet and is even reflected in the bank statement.
On December 7, RBI Deputy Governor T Rabi Sankar said the RBI is exploring technological and legal solutions to keep e-Re transactions anonymous.