Advanced “low and slow” attacks don’t trigger user or session-level alerts, so be sure to set global thresholds. On checkout and gift card validation pages, an increase in failures, or even traffic, can be a signal of carding attacks or that bots such as GiftGhostBot are attempting to steal gift card balances. Reduce Vulnerability.Protect exposed APIs and mobile apps — not just on your website — and share blocking information between systems.
After completing the design phase over the next couple of years, including taking account of developments in the wider payments landscape, the Bank and Government will assess the policy case for a digital pound and determine whether or not to proceed. A digital pound would only be introduced with Parliament’s approval, requiring primary legislation. This legislation would safeguard users’ privacy, guaranteeing that neither the Bank nor the Government could access users’ personal information nor control how households and businesses use their money.
CBDC ecosystems may be at similar risk for cyber-attacks as the current payment systems are exposed to. The cybersecurity considerations need to be taken care of both for the item and the environment. For example, while the token creation process should ensure the highest levels of the cryptography to ensure security at the item level, the transaction of tokens also needs to be secured to ensure trusted environment. 5.1 CBDC being digital in nature, technology considerations shall always remain at its core. Technology is what will constitute any CBDC and technology is what will translate the abstract policy objectives to concrete forms.
By underpinning confidence in the monetary system and enabling efficient financial system operation, singleness supports both monetary and financial stability and the effective and efficient functioning of the real economy. A digital pound, issued by the Bank of England, would be seamlessly exchangeable with cash and bank deposits, ensuring the continuity of a trusted, uniform and accessible means of payment. As a publicly provided platform, it could foster innovation by enabling a varied range of private sector firms to develop innovative and user-friendly services. “Central Bank Digital Currency” or “Digital Rupee” or “e₹” is the digital form of India’s currency, the Rupee. It is akin to sovereign paper currency but takes a different form and is exchangeable at par with the existing currency, the Rupee. As a central bank liability, e₹ provides the public with a risk-free medium of exchange and represents a safe store of value.
It is being issued in the same denominations that paper currency and coins are currently issued. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks. So would issuing CBDC to meet user demand interfere with monetary policy operations? CBDC could crowd out other forms of money and change reserve balances in the banking system, which, in turn, may influence short-term interest rates. Moreover, volatility in CBDC demand could affect central banks’ ability to forecast liquidity, drawing market rates away from the policy target. However, central banks can mitigate these effects by adapting their monetary operations, such as engaging in fine-tuning operations and providing more liquidity to the banking sector.
Partnerships with the private sector are examining new retail payments use cases, including for traditionally financially excluded populations. CBDC, the central bank digital currency, holds a lot of promises by way of ensuring transparency, and low cost of operation among other benefits and the potential to expand the existing payment systems to address the needs of a wider category of users. 7.4.3 Most of the central banks derive their powers from their laws to issue a currency in the form of banknotes and coins, book money and bills. Some central banks even have broader remit to issue currency more generally, which could encompass CBDC. If the central banks decide to issue token based CBDCs, central banks shall need to have the power to issue currency in general rather than limiting their powers to only banknotes and coins.
The first and fundamental question that needs to be answered is the choice of technology platform. In addition to platform choices, other technical considerations shall flow from the policy imperatives. For example, if one of the motivations behind introduction of CBDC is financial inclusion, it should support offline capability. Further, the security aspects of CBDC shall also determine its resilience and will be necessary for robust, secured implementation.
The Bank remains committed to providing cash for those who wish to use it, but the volume of cash transactions is declining. Simultaneously, new forms of privately issued digital money are emerging, which might not always be exchangeable at par with other forms of money. This could occur if private issuers’ commercial incentives make convertibility costly, slow or complex, potentially leading to market fragmentation. Such an inability to move between private and public money could, in principle, increase the feasibility of private issuers being able to create ‘walled gardens’ – closed-loop systems designed to promote their own growth often at the expense of broader economic welfare. The Minister stated that the pilot is covering select locations in closed user group (CUG) comprising participating customers and merchants. The e₹-R pilot currently covers the five cities of Mumbai, New Delhi, Bengaluru, Bhubaneswar and Chandigarh.
Therefore, in addition to technology solutions, security risks would also need to be mitigated through policy calls like putting caps, enhanced risk management and governance framework and rigorous testing of functionalities through pilot before rolling out the CBDCs for public. Therefore, in the absence of a precedence, extensive stakeholder consultation along with iterative technology design may be the requirement, to develop a solution that meets the requirements of all stakeholders. Management of currency is one of the core central banking functions of the Reserve Bank for which it derives the necessary statutory powers from Section 22 of the RBI Act, 1934. Along with the Government of India, the Reserve Bank is responsible for the design, production and overall management of the nation’s currency, with the goal of ensuring an adequate supply of clean and genuine notes in the economy.
