In early November, the Central Bank of India (RBI) launched the wholesale digital rupee sale. The latter, dubbed CBDC-W, is reserved for the secondary market in government securities. It makes it possible to settle transactions on this market as well as between banks. All this at low cost. On the announcement of the launch of CBDC-W, the RBI said that another form of CBDC would be launched on the 1er december.
RBI launches pilot project
The RBI announced the launch of a CBDC specifically designed for retail users. This digital currency, which had been called CBDC-R, can be used in particular by merchants and their customers. She is considered as an electronic version of fiat currency circulating in India. The RBI spear the first phase of the retail CBDC pilot project in four cities across the country, namely: Bangalore, Mumbai, Bhubaneswar and New Delhi.
In India, the banks that will issue digital tokens in these cities are: State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank.
The tokens issued will be used to make and receive payments in real time. That said, later the e-rupee pilot project will be extended to several other cities. These include: Gangtok, Hyderabad, Ahmedabad, Guwahati, Indore, Patna, Kochi, Lucknow and Shimla.
Four other banks will then issue the retail e-rupee: Bank of Baroda, HDFC Bank, Union Bank of India and Kotak Mahindra Bank. The RBI explained that the pilot project could gradually have a greater reach. The idea is to include more cities, banks and users, depending on existing needs.
How will the new CBDC work?
As the representative of the national currency of India, the retail e-rupee will be offered in the same denominations and coins as it. Just like fiat currency, it will be distributed by banks. The digital token will enable person-to-person or person-to-merchant transactions.
The retail e-rupee can be kept in a digital wallet managed by the dedicated banks. The RBI said that the wallet in question will be available on mobile devices. She pointed out that the digital rupee will be accessible to all non-financial consumers and businesses.
According to the RBI, “CBDC is legal tender issued by a central bank in a digital form“. The Indian authority explains that it is the “same as fiat currency” and “only its shape is different“.
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