'RBI plans tokenisation of assets, bonds under wholesale CBDC pilot'

"On the retail side, its technologies, how systems cope and how people behave are the focus areas. So we are not looking at volumes," Sankar said

The Reserve Bank of India (RBI) is planning tokenisation of assets and government bonds under the wholesale Central Bank Digital Currency (CBDC) pilot project, with the focus being to try the technology and not to generate volumes, said T Rabi Sankar, Deputy Governor.

“We are thinking of trying out tokenisation of assets, government bonds and such, that discussion goes on all aspects. But we will just try them out, we are not looking to have volumes because the idea is to try out the technology,” Sankar said on the sidelines of the 19th Banking Technology Conference in Mumbai.

“On the retail side, its technologies, how systems cope, and how people behave are the focus areas. So we are not looking at volumes,” Sankar added.

He further said that transactions through the CBDC pilot have come down from 1 million. “When we targeted the 1 million transactions. We did. But it has come down from 1 million.”

Also, speaking at the event, Sankar said that a standard response to new technology may not be the right approach towards Artificial Intelligence (AI) and quantum computing.

“We need to understand that with artificial intelligence and its ability to process a huge amount of data in a much shorter period of time, and with new technologies like quantum computing, you probably have to completely rebuild most of your encryption systems that you have today,” Sankar said.

He further added that, “I thought we need to convey that the standard response to new technology may not be the right thing to do here. Because the nature of this technology is very, very different.”

He said that new technology does not always eat up jobs as much as is generally thought, and banking will continue to exist as money has to be created. However, he also emphasised that it is important that bankers must adapt and develop quickly to these technological advancements and not be complacent about Artificial Intelligence.

Further, alluding to cybersecurity, Sankar noted that it is an area of concern; most of the banks will have to reconfigure their systems and laws according to the rapidly changing requirements.

“Things have changed rapidly, laws will have to catch up with it,” Sankar added.