WHAT IS RBI DIGITAL E – RUPEE? (CBDC) Image Source: Adda247
WHAT IS RBI DIGITAL E – RUPEE? RBI CBDC PILOT PROJECT LAUNCH?
What is Digital Rupee?Digital Rupee, also known as electronic Rupee or e-Rupee, is a digital currency issued by the Reserve Bank of India (RBI). It is not physically visible or touched but can be exchanged.
What is CBDC Digital Currency?
According to the CBDC concept note, CBDC digital currency is defined as a legal tender issued by RBI.
The CBDC digital currency can also be called e-Rupee or electronic rupee. It is also known as Central Bank Digital Currency. The value of the digital currency will be equal to that of the physical currency.
Features of Digital Rupee:
The Central bank debenture (CBDC) is a currency issued under monetary policy by the central bank. When we deposited our money in the banks, it was a liability of the bank. However, the digital rupee will be a liability of the direct central bank. CBDC will be accepted by every citizen, entrepreneur, government agency etc. CBDC can also be exchanged into physical currency. CBDC has been issued under legal tender and customers will not need to have a bank account.Types of CBDC:
This digital rupee is divided into two parts.
Retail (R-CBDC) – Under R CBDC, all citizens of India will be able to use Digital Rupee and it will also be available to all citizens.
Wholesale (W-CBDC) – W CBDC is created only for a few selected financial institutions. Which can only be used by the wholesaler.
What is CBDC’s Digital Rupee Pilot Project?
The Reserve Bank of India (RBI) announced the launch of digital currency during the budget session. And on November 1, 2022, the RBI delivered on its promise.So far, the RBI has launched a pilot scheme called Wholesale Central Depository Demonetisation (CBDC). In this scheme, 9 public and private sector banks have been included in the pilot scheme.
The CBDC can only be used for wholesale transactions. However, the RBI has also announced that the pilot scheme of retail Central Deposition Demonetisation (CDD) will be launched within the next 1 month. This CBDC pilot scheme will allow us to conduct transactions in electronic form, just like we do physical money transactions now, and the money will be kept under the control of the RBI.
Currently, only a select few people have access to this digital currency. However, in the near future, it will be available to all the citizens of India.
Which banks are participating in the digital rupee wholesale pilot project?
In total, nine banks have been chosen by the central bank to participate in this wholesale pilot program. Some of these banks include:
State Bank Of India
Bank Of Baroda
Union Bank of India
HDFC bank
ICICI Bank
Kotak Mahindra Bank
Yes Bank
IDFC First Bank
HSBC Bank.
The Digital Rupee will be used in the following ways:
The Reserve Bank of India has declared that the Central Depository Card (CBDC) will only be used for wholesale transactions at this time. However, within one month, the Reserve Bank of India (RBI) declared that the Digital Rupee (Rupee) will be used to purchase and sell government securities. This digital currency will be kept in a mobile wallet and can be used for everyday transactions. Payment will be made from the mobile device. If the Rupee needs to be exchanged for its own currency, this can be done. The Rupee has not yet been linked to the Unified Payments Interface (UPI), however, preparations are ongoing to link it to UPI in the near future.How was the Digital Rupee constructed using Blockchain technology?
In the same manner, as Bitcoin or other digital coins are created using blockchain technology, Cryptocurrencies based on Blockchain are also created using blockchain technology to ensure their safety and security for the benefit of all citizens.What's the point of setting up the RBI CBDC?
The primary aim of the RBI CBDC launch is to eliminate the need to convert the currency into various forms and to accept payments based on the current payment systems. The RBI CBDC aims to strengthen the digital economy of India and improve the efficiency of the payment system.The RBI CBDC will reduce the number of cash transactions and develop the digitization of the economy. Transactions can also be carried out easily abroad. This will safeguard the money of the common people and make every transaction hassle-free.
Benefits of Digital Rupee
This will lead to a reduction in the printing costs for the RBI.It will also lead to a significant reduction in corruption as all payments will be made under the control of the government
It will help the government in budgeting and economic planning
You will not have to create an account when using digital currency
In the past, your money was kept in the bank account, but now it will be directly deposited in the central bank as digital currency is a liability of the central bank, thus ensuring the security of your money.
The digital currency will reduce transaction costs for all citizens and the government.
