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Central Bank Digital Currency (CBDC) is a digital form of legal tender issued by the Reserve Bank of India (RBI). Read this to understand everything about RBI’s new project
The Reserve Bank of India (RBI) will launch the first pilot project for central bank digital currency (CBDC) or e-rupee on Tuesday, i.e. today. The pilot will see nine banks, including SBI, Bank of Baroda, HDFC Bank, Yes Bank, Kotak Mahindra Bank and ICICI Bank, settling secondary market transactions in government securities.
The pilot project will focus on settlement of secondary market transactions for government securities.
What exactly is digital currency?
Can it be exchanged for fiat currency?
Will it be available to all?
It will be initially available for the wholesale segment and extended to the retail category in a month. According to RBI, a pilot project for retail e-rupee will start within a month in select locations in closed user groups.
What will be the prime focus of the launch?
Going forward, future pilots will focus on wholesale transactions and cross-border payments based on the pilot’s learnings. Settlement in central bank money would reduce transaction costs.
What are the expectations of RBI?
According to the RBI, using the digital rupee in the wholesale segment is expected to make the interbank market more efficient.
How will it be different from cryptocurrency?
The government has already said that private cryptocurrencies will never be legal tender. The RBI has been strongly opposing private cryptocurrencies as they could have implications on national security and financial stability. This is not the case with digital currency.
First Published: IST
