Ledger Insights notes that while blockchain enables instant atomic settlement, a larger advantage can be programmability. For call money markets, that means if one bank lends to another, it may need the funds to be returned at a specific time. That can be programmed into a smart contract, preventing a delay.
Intraday transactions are popular for interbank blockchain solutions, and the call money markets are consistent with that. In other jurisdictions, multiple blockchain solutions target intraday repos (JP Morgan, Broadridge). And UK startup Finteum is working on FX swaps.
Meanwhile, in early September at a fintech festival in Mumbai, Reserve Bank of India (RBI) governor Shaktikanta Das gave an update on the retail pilot. He said that the digital rupee had been made available to 1.5 million users, that the pilot is being operated through 13 banks in 26 cities and that just over 300,000 merchants are currently accepting payments in the digital fiat currency. The central bank has set a target of one million transactions a day by the end of 2023.
To make large-scale use of a retail digital rupee in India feasible, it is necessary to link CBDC wallets to the Unified Payments Interface (UPI) rail, probably via QR code. UPI is so integral to the digital payments infrastructure of India, processing more than 300 million transactions daily, that it is hard to imagine the CBDC project getting off the ground without UPI linkage.
Looking ahead, the RBI plains to enable people to open CBDC wallets without needing a bank account, and with offline capabilities, strengthening financial inclusion. This could make CBDCs more attractive in rural areas with patchy mobile networks or few bank offices, and to those reluctant to engage with regular banks. Offline CBDC usage in rural areas could help increase digital collections for NBFI lenders that depend significantly on cash receipts.