In the Union Budget for 2022-23, the finance minister had said the RBI would roll out a digital equivalent to the rupee in the current financial year. 
In the Union Budget for 2022-23, the finance minister had said the RBI would roll out a digital equivalent to the rupee in the current financial year. The Reserve Bank of India (RBI) on Friday released a concept note dealing with a digital currency for India. As per its note, the purpose is to create awareness about CBDCs in general and the planned features of the Digital Rupee (e-Rupee). CBDC, or Central Bank Digital Currency, can be defined as the digital form of the country’s sovereign currency.
The Indian central bank has said it defines CBDC as a legal tender issued by the central bank in a digital form. It is akin to sovereign paper currency but takes a different form, exchangeable at par with the existing currency, and shall be accepted as a medium of payment, legal tender, and a safe store of value.
The RBI note explains the objectives, choices, benefits, and risks of issuing a CBDC in India. The note also seeks to explain Reserve Bank’s approach toward the introduction of the CBDC.
Also read: 'I'm a little uncomfortable': KV Kamath trashes crypto, says he sees no value in the asset
RBI said in a statement, "The purpose behind the issue of this Concept Note is to create awareness about CBDCs in general and the planned features of the Digital Rupee (e₹), in particular. It explains the objectives, choices, benefits, and risks of issuing a CBDC in India. The Note also seeks to explain Reserve Bank’s approach towards the introduction of the CBDC."
The central bank also said that it would soon launch the pilot program for the "Digital Rupee" for specific use cases.
"The e-rupee 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," the central bank’s note stated.
It is worth noting that Finance Minister Nirmala Sitharaman announced during the 2022 Union Budget in February that India would launch its own digital currency, a CBDC called the "Digital Rupee" which would be minted by the RBI.
CBDCs and their reach
Globally, many nations, such as China, Ghana, Jamaica, and other European countries are exploring their CBDC products. Some have already launched their digital currencies. For instance, Jamaica’s CBDC JAM-DEX was launched in June 2022, China’s e-yuan was launched during the Winter Olympics, and Europe has been conducting trials of its digital Euro CBDC since June 2021.
Also read: RBI's CBDC can make payment systems efficient: Deloitte
According to the Central Bank Digital Currency Tracker by Atlantic Council, there are nine countries that have fully launched a central bank digital currency (CBDC). Eight of the nine countries are located in the Caribbean. The Sand Dollar of the Bahamas was the first CBDC of the world, it was launched in 2019
Of the G20 countries, 19 are exploring launching their own CBDCs, while 16 of them are already in the development or pilot stage. This includes South Korea, Japan, and Russia. India has also joined the list now.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today
