THE PILOT PROJECT: CBDC (Central Bank Digital Currency) LAUNCHING ON 1ST DECEMBER

                                  

India’s much awaited CBDC (Central Bank Digital Currency) a sort of official crypto-currency for retail users is launching on 1^st December, Thursday 2022. Initially four banks are going to operate the use of it State bank of India, ICICI Bank, Yes Bank and IDFC First bank and also currently in four cities Mumbai, New Delhi, Bengaluru and Bhubaneswar. The advantages of e-rupee has said by RBI earlier key motivations for exploring the issuance of CBDC in India among others include reduction in operational costs involved in physical cash management, fostering financial inclusion, bringing resilience, efficiency and innovation in the payments system.

 

WHAT ARE THE FUTURE PLANS OF RBI THROUGH CBDC?

 As we all know previously also it is said by our government that India will have its own form of e-rupee though our economic system is also boosting through such steps & involvement. It will add efficiency to the settlement system and boost innovation in cross-border payments space and provide the public with uses that any private virtual currencies can provide, without the associated risks. The RBI has repeatedly flagged concerns over money laundering, terror financing, tax evasion, etc with private cryptocurrencies like Bitcoin, Ether, etc. Introducing its own CBDC has been seen as a way to bridge the advantages and risks of digital currency. The e₹-R would be in the form of a digital token that represents legal tender. It will be issued in the same denominations as paper currency and coins, and will be distributed through intermediaries, i.e., banks.

 

HOW CAN WE ACCESS THE USE OF IT?

As modernization is evolving through digital utilization so it is important for every age of person to know the access of it. Although, users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones and devices, according to the RBI. Transactions can be both person to person (P2P) and person to merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations.“The e₹-R would offer features of physical cash like trust, safety and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks,” the RBI said. RBI has demarcated the digital rupee into two broad categories: general purpose (retail) and wholesale. On November 1, the RBI launched the digital rupee for the wholesale segment to settle secondary market transactions in government securities. Wholesale CBDC is designed for restricted access to select financial institutions. It has the potential to transform the settlement systems for financial transactions undertaken by banks in the government securities (G-Sec) segment, inter-bank market and capital market more efficient and secure in terms of operational costs, use of collateral and liquidity management.