The nation’s Reserve Bank says virtual currency 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 in the near future.

“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.

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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.

Retail CBDC, which is intended for the settlement of interbank transfers and related wholesale transactions, will potentially be available for use by everyone – private sector, non-financial consumers, and businesses.

Wholesale CBDC, which represents an electronic version of cash primarily meant for retail transactions, is designed for restricted access to select financial institutions.

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.

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