Cyber security, frauds main concerns with digital currency: RBI

The RBI had earlier this year announced that it has started work on a central bank digital currency

As the RBI moves ahead for the launch of the central bank digital currency (CBDC), Governor Shaktikanta Das on Wednesday marked out cyber security and digital frauds as the main challenges in the new system.

Deputy Governor T Rabi Sankar said there are two types of CBDCs - wholesale and retail - and a lot of work has happened in the former while the latter was termed as a "complicated" aspect which will take time.

The RBI had earlier this year announced that it has started work on the CBDC, in line with other major central banks of the world which are looking at a fiat digital currency. According to a report, the RBI is looking to start with pilot exercises on the same front by early next year.

"Main concern comes from the angle of cybersecurity and possibility of digital frauds. We have to be very careful about that," Das told reporters in the post-policy interaction.

Das recalled that a few years ago, there were concerns with fake currency and similar aspects can play out with the launch of the CBDC, which need to be prevented by putting up the necessary firewalls and a robust security architecture.

Sankar explained that the CBDC will be an electronic version of the current paper-based currency and also underlined the risks around digital frauds and cyber risks as "major challenges".

"There has been a lot of work which has happened in the wholesale account-based, while retail is complicated and will take time. As and when whichever is ready first, we will release it for a pilot," he added.

Earlier, Das had hinted about a soft launch for the CBDC by the end of December 2021.