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Central Bank Develops Digital Currency Prototype: New Phase in CBDC Development

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Central Bank Develops Digital Currency Prototype: New Phase in CBDC Development

The central bank has recently developed a prototype for a digital currency, known as Central Bank Digital Currency (CBDC). Krishna Ram Dhunju, the head of the CBDC department at the central bank, unveiled the prototype of the CBDC system, mentioning that it would be developed as an initial version with limited features.

Key Highlights of the News:

Prototype Development:

  • The interface (digital layer) of the CBDC system was publicly revealed for the first time.

  • The prototype is based on an intermediary architecture, where the central bank does not directly provide digital currency to users but instead offers it through banks and financial institutions.

Initial Plan for CBDC:

  • The initial phase will focus on using CBDC for general transactions.

  • The CBDC will not bear any interest.

  • The bank is preparing to implement a pilot test for wholesale CBDC in August 2026, intended for payments between banking institutions and securities transactions.

International Collaboration:

  • The central bank has joined the ‘mBridge’ project of the Bank for International Settlements (BIS) Innovation Hub in Hong Kong as an observer member.

  • The BIS Innovation Hub, in collaboration with the Hong Kong Monetary Authority and the Hong Kong Applied Science and Technology Research Institute, has provided the codebase of the retail CBDC prototype named ‘Aurum’.

Differences of CBDC:

  • Governor Maha Prasad Adhikari clarified that CBDC should not be considered as an alternative to cryptocurrency, will not replace cash, and will not impact the existing digital payment systems.

  • CBDC’s value will not fluctuate and will be similar to cash.

Various Opinions and Suggestions:

  • During the event, various opinions and suggestions were presented by banks, digital payment service providers, remittance companies, security agency officials, and university professors regarding the implementation of CBDC.

  • Governor Adhikari mentioned that there are still doubts and misconceptions about CBDC, and it is necessary to address these concerns gradually.

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