Digital Rupee (CBDC-R)

Main article: National Cryptocurrencies (CBDC)

History

2022

Start of pilot use in the retail market

On December 1, 2022, India began using the digital rupee (CBDC-R) for settlements in the retail market as part of the first phase of a pilot project in a closed group of electronic currency users.

The Reserve Bank of India launched e-currency settlements initially in four cities: New Delhi, Mumbai, Bengaluru and Bhubaneswar. State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank are involved in the project.

India begins testing digital rupees

In early October 2022, the Reserve Bank of India (RBI) released a document announcing digital rupee (E-Rupee) testing. It is assumed that the emergence of such a currency will open up new opportunities both for the financial sector of the country, and for business representatives and ordinary citizens.

The idea of ​ ​ introducing national digital currencies is being worked out by many states, including Russia, China and South Korea. These assets, unlike cryptocurrencies like bitcoin, should be controlled by the central bank of each country. The introduction of digital rupees, according to the Indian regulator, will save significant funds on the production of traditional banknotes. In addition, cross-border payments will be simplified. Moreover, electronic rupees will be freely converted into regular cash.

India begins testing digital rupees

But there are also a number of difficulties. These are, in particular, certain issues related to financial stability, monetary policy and the structure of the financial market. In addition, the control of digital transactions can be a deterrent: many people in India prefer cash because it provides anonymity. Another problem is the need to ensure that digital rupees can be used without access to the Internet. The fact is that out of the country's 1.4 billion population, 825 million people are provided with access to the Network. The solution to the issue can be the use of local digital wallets (for example, in the form of a smartphone application) or the ability to send digital money via Bluetooth.

A possible obstacle also lies in the fact that the authorities will have to ensure for bank accounts containing digital currency, all the same advantages that are available for ordinary accounts.^[1]

Notes