The Reserve Bank of India (RBI) will adopt a graded approach to introduce the blockchain-based Central Bank Digital Currency (CBDC). 

The phased approach will ensure financial stability, monetary policy conformity and efficient currency operations and payment systems. The steps include proof of concept, pilots and the launch of digital currency.

The central bank has been exploring the pros and cons of introduction of CBDC in India, ever since Finance Minister Nirmala Sitharaman announced in her budget speech that it would be introduced by 2023. The digital rupee move will give a big boost to the economy, she had said.

“The Reserve Bank is engaged in the introduction of CBDC in India. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems," the central bank said in its annual report released on Friday.

CBDCs can lead to cheaper and more efficient currency management steps. Several countries, including the US, are weighing the options of introducing a central bank digital currency.

The introduction of CBDC in India has prompted crypto exchanges to believe that it will help in framing regulations.