India and Canada are independently exploring the offline functionality of central bank digital currencies (CBDC).
Two central banks are simultaneously exploring the offline functionality of CBDCs. The Reserve Bank of India (RBI) is testing the offline performance of the digital rupee, its Executive Director Ajay Kumar Choudhary told CNBC. The Bank of Canada (BoC) is conducting similar studies, according to a research note.
For instance, the RBI studies touch on the offline functionality of CBDCs as “[the digital rupee] will soon become the medium of exchange and it needs all features of physical currency, including anonymity.”
The Reserve Bank of India launched a CBDC pilot project in November 2022, connecting 13 cities with a population of about 55 million people and eight major banks in the country. Moreover, representatives of the Indian central bank are studying the potential of the digital rupee for cross-border transfers and interaction with outdated financial systems in other countries.
For its part, the Bank of Canada is actively examining retail CBDCs, considering their use as a supplement to existing legal payment tools. In particular, the BoC researchers are exploring options for the technical implementation of offline transactions using digital Canadian dollars.
The research note points out that a CBDC payment system that requires no Internet connection is potentially more sustainable than other electronic payment methods, such as credit and debit cards. The current research is part of a broader study of retail CBDCs by the Bank of Canada.
The projects are independent of each other but reflect a general interest among the banking industry in the possible uses of CBDCs. Representatives of the central banks in China and Japan have previously reported on the development of options for the offline use of CBDCs.
