Reserve Bank of India to commence pilot launches of the e-rupee
The central bank announced the imminent release of a pilot launches of a digital rupee soon and provided a concept paper to prepare for its use.
The Reserve Bank of India (RBI) on Friday released its concept note for central bank digital currency (CBDC) and revealed that it will soon commence limited pilot launches of the e-rupee for specific use cases.
The paper define objectives, benefits, risks, as well as explaining technology and design choices, possible uses, issuance mechanisms, privacy issues and the implications of the introduction of CBDC on the banking system, monetary policy, financial stability, in order to prepare for its use.
The digital rupee or CBDC of India – which was announced by the Finance Minister Nirmal Sitharaman in Parliament during her budget speech in February, in order to be launched during the course of this financial year – will be legal tender issued by the RBI and will be treated as equivalent to sovereign currency and is exchangeable one-to-one at par with the fiat currency. It will be in alignment with RBI monetary policy and will appear as a liability in the central lender's balance sheet.
In the govermeent’s plan, CBDC will be a medium of payment, a legal tender for which holders need not have a bank account and a safe store value for all citizens, businesses, governments and others, which can get it converted in the bank money or cash, aiming to speed up the transactions and reduce the cost.
With the RBI concerned about the proliferation of crypto assets to pose significant risks related to money laundering and financing of terrorism, CBDC “could provide the public with a risk-free virtual currency that will provide them with legitimate benefits without the risks of dealing in private virtual currencies,” the RBI said.
Crypto exchanges are hopeful that the introduction of digital currency will lead to a robust and sound regulatory framework for the digital ecosystem in India, even for the private cryptos. Shivam Thakral, CEO, BuyUcoin said that digital version of money will make transactions cheaper, secure and easy along with far reaching effects of financial inclusion and easy implementation of government fiscal policies.