India is working towards introducing what is known as ‘digital currency’. The currency will be referred to as the E-Rupee and is intended to make payments much more efficient and will bolster the digital economy
The Reserve Bank of India (RBI) said on Friday it will start pilot launches of the much-anticipated Central Bank Digital Currency (CBDC), or e-rupee, for specific-use cases soon.
CBDC is a currency that is backed by the regulator and stored in a digital format. It can be converted into paper currency and will reflect on the RBI’s balance sheet, thereby granting it legal tender status. India is aiming to launch its own central bank digital currency in this financial year that ends March 31, 2023.
“Currently, we are at the forefront of a watershed movement in the evolution of currency that will decisively change the very nature of money and its functions,” the Central Bank said in a statement.
The Digital Rupee is akin to sovereign paper currency, but takes a different form, exchangeable at par with the existing currency, and will be accepted as a medium of payment, legal tender, and safe store of value, according to the RBI.
The concept note also discusses key considerations such as technology and design choices, possible uses of the digital rupee, and issuance mechanisms, among others,” the regulator added.
The RBI expects the digital rupee to lower the cost of issuing money and transactions, as global monetary regulators now seek to popularize a more acceptable electronic form of currency amid the dwindling use of paper currency.
The RBI concept note says the e-rupee will bolster India’s digital economy, enhance financial inclusion, and make the monetary and payment systems more efficient.
