INDIA ISSUES DIGITAL CURRENCY: E-RS WHAT IS IT AND HOW DOES IT WORK?
The Reserve Bank of India (RBI) has announced the launch of its official cryptocurrency variant, the Central Bank of India Digital Currency (CBDC), from Thursday (1st December).
What Happens to Digital Retail Rupees?
In fact, retail e-rupees are the electronic version of cash and are primarily intended for retail transactions. It could be available to everyone, including the private sector, non-financial consumers and businesses, and would be the direct responsibility of central banks to provide secure access to money for payments and settlements
RBI previously stated that “CBDC is legal tender issued in digital form by the Central Bank. It is the same as fiat currency and is 1:1 exchangeable with fiat currency. It's just a different shape."
What are the benefits of e-rupees?
RBI previously stated that key factors investigating his CBDC issuance in India include reducing operational costs associated with physical cash management, promoting financial inclusion, and resilience, efficiency and innovation in the payment system.
Increase the efficiency of payment systems, foster innovation in the field of cross-border payments, and provide the public with the uses that all private cryptocurrencies can offer without the associated risks.
Who can use the Retail CBDC?
Commencing December 1 is the first phase of the pilot, which will target selected locations and banks of the Closed User Group (CUG), which includes participating customers and merchants,
RBI said. Says, the pilot will initially cover his four cities of Mumbai, New Delhi, Bangalore and Bhubaneswar, and customers and merchants can use their digital his rupees (e₹-R) or e-rupees.
Four banks will be involved in the controlled launch of digital currencies in these four cities: State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank Services will then be expanded to the cities of Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. According to RBI, his four banks, Baroda Bank, Union Bank of India, HDFC Bank and Kotak Mahindra Bank, will participate in the pilot.
Said the scope of the pilot project could be expanded gradually to include more banks, users and locations as needed.
Differences from UPI
Reserve Bank of India (RBI) Governor Shakktanta Das revealed on Wednesday 7th December the differences between the digital rupee and the Unified Payment Interface (UPI). At a post-political press conference,
Das cited the differences between the two.
This indicates that transactions via UPI must go through banks, whereas in the case of digital currencies, money is transferred from wallet to wallet without such involvement.
All his UPI transactions involve bank intermediation.... In CBDC, just like fiat users go to the bank, withdraw money and keep it in their wallets, here too Users can withdraw digital currency and store it in their wallet.
Make mobile wallets and payments. It is being moved from one person's wallet to another without bank intermediation," said the RBI governor.
“UPI is the transfer of money from bank account to bank account while the digital rupee is a cash payment. Two private companies may offer wallets and allow money to be moved between them, but UPI is UPI cannot do this as it requires banks to be involved in the payments,” said RBI Deputy Governor T Rabi Sankar.
RBI Press Releases: https://m.rbi.org.in//Scripts/BS_PressReleaseDisplay.aspx?prid=54773