Central bank testing digital currency-based bond platform

Mumbai: It has been quite a wait for the launch of the Reserve Bank of India's digital currency, but it looks like bond traders are about to have their first glimpse of its usage.

The RBI is in the process of beta testing a new version of its bond

Nine banks roped in for trials of new NDS-OM platform

trading platform whose transactions will be denominated in the digital currency, market sources said.

Nine banks have been roped in for trying out the new avatar of the RBI’s Negotiated Dealing System Order Matching platform on which gilts are currently traded, sources said. The RBI did not respond to an e-mail seeking clarity on the matter.

"Demos are likely to be held very soon, the project has seen quite a push from the RBI’s side," a treasury official with a bank said.

The new system requires banks to hold digital currency accounts with the RBI for settlement of funds, separate from their current rupeedenominated accounts. As of now, the new platform allows for buying or selling securities through a request-for-quote, sources said.

In a request-for-quote process, an entity invites quotes for purchase or sale of a security, and strikes the deal by accepting a submitted quote.

As of now, the new bond trading platform offers a very basic functionality, but in the long run, it could prove be a crucial step towards the eventual integration of the RBI’s digital currency into the Indian financial system. The Union

Budget for 2022-23 (Apr-Mar) had said the RBI would roll out a digital equivalent to the rupee in the current financial year.