Reserve Bank of India plans to use blockchain to reduce paper currency usage

HR Khan, deputy governor of the Reserve Bank of India, said on Friday that the central bank will set up a committee as soon as possible to study blockchain technology in order to reduce the use of paper currency.

“Blockchain technology is a product that came along with bitcoin, which has greatly facilitated financial transactions. So, we should study how blockchain technology can be applied to financial transactions to make the entire data system more complete,” Khan told reporters at an event organized by the Institute for Development and Research in Banking Technology (IDRBT).

“There are also many officials from the Reserve Bank of India, banking technology development and research institutions and industry personnel who will learn more about this technology. Because blockchain technology has unlimited potential.”

Khan said the impact of Brexit would be short-term, and if it could not be resolved in the short term, the system would be in place to deal with the medium-term impact.

“We will monitor it closely. We will be affected by global turmoil because of the macroeconomic fundamentals. But we are well prepared to weather the storm because we are no longer the fragile five countries and the country is no longer volatile,” he said.

Discussing the instability of the rupee, Khan said the Reserve Bank of India already has $363 billion in foreign exchange reserves and has sufficient tools to deal with the crisis that will arise from the instability of the rupee.

Khan said the Reserve Bank of India is in talks with telecom regulator Trai, including on tax rates for mobile banking.

Khan added that the RBI will soon come out with a Customer Liability Framework for credit and debit cards to clarify the liability of banks and individual customers in case of fraud or unauthorised use.