India to launch soon Digital Rupee on pilot basis

New Delhi: India’s Reserve Bank of India (RBI) will soon launch the pilot project of the digital rupee for specific use cases as it tests digital current in India. The central bank of India on Friday released a concept note on the Central Bank Digital Currency (CBDC).

“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 Reserve Bank of India (RBI) said.

“The Concept Note also discusses key considerations such as technology and design choices, possible uses of Digital Rupee, issuance mechanisms, etc. It examines the implications of the introduction of CBDC on the banking system, monetary policy, financial stability, and analyses privacy issues,” the statement added.

“The Reserve Bank will soon commence pilot launches of the digital rupee for specific use cases. As the extent and scope of such pilot launches expand, RBI will continue to communicate about the specific features and benefits of the digital rupee, from time to time,” it further added.

The digital version of a country’s fiat currency that is also a claim on the central bank is known as a Central Bank Digital Currency (CBDC).

Transactions and other services that would usually be carried out with physical money can now be carried out with digital currency.

These digital currencies can be converted into paper currency and will reflect on the RBI’s balance sheet, thereby granting it legal tender status.

India is planning to launch its own central bank digital currency in 2023.