Watershed moment as RBI to soon start pilot launch of digital rupee

PTI

Mumbai, October 7

The RBI on Friday said it will soon commence the pilot launch of e-rupee for specific use cases with a view to bolstering India’s digital economy, making payment systems more efficient, and checking money laundering.

Bolstering digital economy

• The move will bolster India’s digital economy, making payment systems more efficient, and checking money laundering
• Digital currency is aimed to complement current forms of money and is envisaged to provide an additional payment avenue to users
• Across the globe, over 60 central banks have expressed interest in CBDC with a few implementations already under pilot across both Retail and Wholesale categories

In a concept note on Central Bank Digital Currency (CBDC), the RBI said CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems.

“Supported by state-of-the-art payment systems of India that are affordable, accessible, convenient, efficient, safe and secure, the Digital Rupee system will further bolster India’s digital economy, make the monetary and payment systems more efficient and contribute to furthering financial inclusion,” the paper said.

CBDC is a digital form of currency notes issued by a central bank. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance are specific to each country’s unique requirements.

The Government of India had announced the launch of the Digital Rupee — a Central Bank Digital Currency (CBDC) from fiscal year 2022-23 onwards in the Union Budget placed in Parliament on February 1, 2022.

The central bank said: “The Reserve Bank will soon commence pilot launches of e-rupee for specific use cases. As the extent and scope of such pilot launches expand, RBI will continue to communicate about the specific features and benefits of e-rupee, from time to time.” CBDC can be classified into two broad types — general purpose or retail (CBDC-R) and wholesale (CBDC-W). Retail CBDC would be potentially available for use by all and while wholesale CBDC is designed for restricted access to select financial institutions.

“For CBDC to play the role as a medium of exchange, it needs to incorporate all the features that physical currency represents including anonymity, universality, and finality,” the note said.

Across the globe, the note said more than 60 central banks have expressed interest in CBDC with a few implementations already under pilot across both Retail and Wholesale categories and many others are researching, testing, and/or launching their own CBDC framework.

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