RBI to soon commence pilot launch of digital Rupee

RBI also released a concept note on Central Bank Digital Currency (CBDC) to build awareness about such currencies in general and the planned features of the Digital Rupee in particular.

As the extent and scope of such pilot launches expand, the RBI will continue to communicate about the specific features and benefits of digital rupee, from time to time, it said in a statement.

"The e-rupee will provide an additional option to the currently available forms of money. It is substantially not different from banknotes, but being digital it is likely to be easier, faster and cheaper. It also has all the transactional benefits of other forms of digital money," the RBI said.

The concept note discusses key considerations such as technology and design choices, possible uses of the digital rupee, and issuance mechanisms, among others.

It examines the implications of the introduction of CBDC on the banking system, monetary policy, financial stability, and analyses privacy issues.

RBI said it broadly defines CBDC as the legal tender issued by a central bank in a digital form. It is similar to sovereign paper currency but takes a different form, exchangeable at par with the existing currency and shall be accepted as a medium of payment, legal tender and a safe store of value.

CBDCs would appear as a liability on a central bank’s balance sheet.

Finance Minister Nirmala Sitharaman while presenting the Union Budget for 2022-23 had said that the RBI would roll out a digital equivalent to the rupee in the current financial year.

RBI Deputy Governor T Rabi Sankar had said last month that CBDC is the most efficient system for cross-border payments.

RBI aims to give viable alternatives and is not going for a cashless society, he had said.