The Indian government announced the launch of the CBDC in October already and finally the RBI is launching E-Rupee today (1 December) for Banks. This is the biggest step of the Indian government towards crypto acceptance after continuously calling it a risk to Indians.
Back in October RBI released a “Concept Note” of 50 pages which included a discussion about the launch of this CBDC. India is not the very first country to do so as there are already many countries working on this including China.
Earlier the Retail version of CBDC, CBDC-R was made public to know its impact and how well it’s functioning. After the successful launch, finally we are getting CBDC for bank and wholesale transactions (CBDC-W).
The Managing Director of Resurgent India, Mr. Jyoti Prakash Gadia said
“This (retail launch) indicates the consistent efforts on the part of RBI to bring out an efficient, user-friendly mechanism of digital currency far ahead of other central banks across the world,”
Things to know about the RBI launching E-Rupee
Now the E-Rupee will be available for Banking where users will be able to use it just like normal currency.
- It will be launched in pilot mode in partnership with 8 banks.
- The initial phase will begin with 4 banks: SBI, ICICI Bank, Yes Bank, and IDFC First Bank.
- The next will include other 4 banks the Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank.
- Initially, it will be available in 4 cities only Mumbai, New Delhi, Bengaluru, and Bhubaneswar.
- Later, it will cover Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lukhnow, Patna, Shimla, etc.
Features of this E-Rupee
The E-Rupee is the digital version of the Indian currency “Rupee”, so why did the Indian government choose to create the CBDC because it’s not a proper cryptocurrency?
The answer to that is very simple that is; In the case of a normal bank transfer of currency from one person to another, it never happens directly. It happens through commercial banks and that doesn’t sound that right. Because of that, the liability comes on the commercial banks which causes slow transactions or errors in the process. Also, every user needs to have a mus bank account here but in the case of the CBDC, the users can make direct transactions and they do not even need a bank account for that. Also, the liability will come directly from the RBI (Reserve Bank of India) only.
A CBDC is just like a cryptocurrency but unlike that, it is centralized means the price and system will be controlled by India’s central bank.
According to the Finance Minister, Nirmala Sitaraman
“Introduction of Central Bank Digital Currency (CBDC) will give a big boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system. It is, therefore, proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23.”
According to Sharad Sharma, co-founder of iSpirt “There are countries which neither have friction-free payments nor are they inexpensive. So they want a new money ledger to solve this problem. India has both friction-free payments and inexpensive payments, so it doesn’t keep a new money ledger.”
The deputy governor, Shankar said,
“India’s high currency to GDP ratio holds out another benefit of CBDCs. To the extent large cash usage can be replaced by CBDCs, the cost of printing, transporting, storing and distributing currency can be reduced”
Feature of this E-Rupee
- It is India’s own CBDC and has made India one of the very first countries to be a part of the CBDC.
- It can be transacted easily through digital wallets (provided by eligible banks) on your mobile phone or device.
- The transaction can be Person-to-Person (P2P), and Person-to-Merchant (P2M).
- To pay the merchants, QR (Quick Response) can be used.
- You won’t get any interest in keeping this digital Rupee.
- You can convert it into paper money and deposit it in banks.
What are your thoughts on this decision of RBI launching the E-Rupee? Do you think it will survive as it has high competition with cryptocurrency?
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