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India all set to pilot launch of its e-rupee / CBDC: RBI

RBI ecurrency

In a document shared by the Fintech Department of the Reserve Bank of India, named “Concept Note on Central Bank Digital Currency”, the RBI has detailed two proposed models of a central bank digital currency (CBDC).

The document says “Central Bank Digital Currency (CBDC) is a digital form of currency notes issued by a central bank. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance are specific to each country’s unique requirements. This Concept Note explains the objectives, choices, benefits, and risks of issuing a CBDC in India referred to as e₹ (digital Rupee). The e₹ 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.”

It is reported that RBI has established an internal working group to make recommendations on the CBDC’s design and testing. Once the recommendations are in, the CBDC will be tested in a sandbox environment to evaluate its design and functionality. If the required outcomes are met, then a pilot of the CBDC will be commenced.

CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems. Supported by state-of-the-art payment systems of India that are affordable, accessible, convenient, efficient, safe, and secure, the Digital Rupee (e₹) system will further bolster India’s digital economy, make the monetary and payment systems more efficient and contribute to furthering financial inclusion.

The RBI also mentioned that “It is the responsibility of the central bank to provide its citizens with a risk-free central bank digital money which will provide the users the same experience of dealing in currency in digital form, without any risks associated with private cryptocurrencies.”

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