Central Bank Digital Currency (CBDC), also known as Digital Rupee or E-Rupee, will soon begin testing released by the Reserve Bank of India (RBI) for limited applications.
The Reserve Bank of India (RBI) has stated through its concept note on CBDC that the E-Rupee will serve as an alternative to the conventional forms of currency. The concept note also addresses other vital factors including potential applications of the digital rupee and its issuance methods.
“The e-rupee will provide an additional option to the currently available forms of money. It is substantially not different from banknotes, but being digital it is likely to be easier, faster and cheaper. It also has all the transactional benefits of other forms of digital money.” – said the RBI.
The concept note covers the history of the e-rupee system in the country as well as the rationale behind its creation, the features it will have, and the policy frameworks that will govern it. The goal is to create a CBDC system that is open, inclusive, interoperable, & innovative in order to fulfill the needs of India’s burgeoning digital economy.
“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,” added the central bank.
There are two major forms of CBDC: those used for retail, known as CBDC-R, and those used for wholesale, known as CBDC-W. (CBDC-W). Wholesale CBDC is meant to be accessible only by a select group of financial institutions, while anybody could use retail CBDC. The digital currency issued by the RBI is easily exchangeable for bank money and cash.