India's national digital currency (CBDC) has blockchain-based components. This was announced by Finance Minister Pankaj Chaudhary.

In a response to a parliamentary inquiry, the official said that P2P and P2M transactions are conducted through a digital wallet opened by participating banks. CBDC is issued as a digital token and has the same denominations as cash currency.

Like physical money, CBDC has similar properties of trust, security and settlement finality. The digital version does not carry interest charges. It can be converted into bank deposits.

Testing of the retail version of CBDC with individual merchants and consumers began December 1. It involves eight credit organizations.

As part of the full implementation, it’s expected to expand the scope of the projects - with more participating banks, more users and more geographic coverage.

On November 1, trials of a wholesale version of CBDC began. This version of the digital rupee will be used to settle transactions with government securities in the secondary market. It is expected to reduce transaction costs by eliminating the need for settlement guarantees or collateral infrastructure.

Recall that in June, RBI deputy governor T. Rabi Sankar suggested that CBDCs could completely displace private virtual currencies, including Bitcoin.