Digital wholesale rupee a landmark in history of currency; retail e-Rupee launch soon, says RBI guv Das

The Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday termed the launch of wholesale e-rupee a landmark moment in the history of currency. “Central Bank Digital Currency (CBDC) or digital rupee (e?) will transform the way business is done and the way transactions are conducted,” Das said in his address at FICCI’s Banking Conference – FIBAC 2022. He added that RBI is currently working towards a phased implementation of the e-rupee. “Yesterday, we started our pilot project on wholesale CBDC. We propose to commence the pilot project for retail CBDCs shortly,” he added.

For the unversed, CBDC is a regular currency issued digitally. It is the legal tender issued by a central bank in digital form. India’s CBDC is called ‘e?’, and it can be exchanged one-for-one for fiat currency as it is a digital form of rupee. “ It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different,” said RBI. The use case for the wholesale pilot is settlement of secondary market transactions in government securities. The use of e?-W, or wholesale, is expected to make the interbank market more efficient, according to the banking regulator.

e-Rupee: India’s first move into the digital finance space

“I think the pilot program is just to test “e-rupees” between the banks and the government. It will be used to purchase government securities. The final aim of any CBDC is to allow cross-border payments and reduce fees. This could represent the first move into the digital finance space by India. Since the government is still wary of cryptocurrencies, they seem to be exploring CBDCs as a more controlled currency choice. CBDCs are very different from cryptocurrencies. Except for the digital aspect all features are different,” said Akshay Bajaj, CEO, and Co-Founder of DeFiVerse

“CBDCs are controlled by the government and will be used as per the governments rules. All users will be KYCed and the government will decide on the issuance of new e-rupees. Cryptos are not governed by any central figure and anybody can use them in whatever way they want (hence the term decentralized). Also, the issuance of cryptos cannot be done by any entity. The entire process happens based on some formula which can never be changed,” he added.