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Digital Rupee: The Reserve Bank of India (RBI) said that ‘e-Rupee’ will improve rather than replace the existing digital payment. The RBI also said that it will soon start a pilot launch of the Central Bank Digital Currency (CBDC), the digital version of the Indian currency rupee, for specific use cases. The RBI, in an official communication, said it has also issued a concept note on Central Bank Digital Currency (CBDC), aimed at creating awareness about the planned features of such currency in general and the digital rupee in particular.
What else has been said in the concept note of RBI – Know
RBI’s concept note states that a central bank digital currency is a sovereign currency issued by central banks in line with monetary policy. It will appear as a liability on the balance sheet of the central bank. The concept note also discussed important considerations such as technology and design options, possible uses of the digital rupee and the issuance mechanism, RBI said in a statement. According to the concept note, digital currency should be accepted by all citizens, enterprises and government agencies as a medium of payment, legal tender and a safe store of value.
It is not necessary to have a bank account for digital currency: RBI
The digital currency will be freely convertible against commercial bank money and cash, the RBI statement said. This will be a convertible legal tender, for which the holders do not need to have a bank account. Presenting the Union Budget for 2022-23, the Finance Minister had said that the RBI will roll out a digital equivalent of Rs. As the range and scope of such pilot launches expand, RBI will continue to communicate the specific features and benefits of the digital rupee from time to time.
Digitally will cost less
The digital rupee is expected to reduce the cost of issuance of money and transactions. Faced with the declining use of paper currency, central banks are now trying to popularize a more acceptable electronic form of currency. The central bank’s digital currency will be backed by India’s state-of-the-art payment systems that are affordable, accessible, convenient, and secure. The concept note of the apex bank states that e-rupee will strengthen India’s digital economy, enhance financial inclusion and make monetary and payment systems more efficient.
E-Rupee will be easier, faster and cheaper to use
RBI said in the statement, the e-rupee will provide an additional alternative to the currently available currency. It is not much 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 currency.
The note states that the digital currency should be developed as a platform that is highly scalable to support large volumes and transaction rates without degrading performance. It should be robust to ensure the stability of the financial ecosystem and have tamper-proof access control protocols and cryptography to protect data among other features.
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