The e-rupee,
the Reserve Bank of India’s (RBI) central bank digital currency (CBDC), has launched its first trial.
According to a press release that was signed by Yogesh Dayal, the RBI’s chief general manager, the pilot will start on December 1st, 2022.
The central bank made a suggestion that the experiment will begin in December in October, and the most recent announcement clarifies this for everyone who is interested.
According to the RBI, the pilot “will test the stability of the entire process of digital rupee generation, distribution, and retail usage in real-time.”
The State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank are the first quartet of financial institutions to appear in the pilot. Following the initial phase of testing, the RBI confirmed that four additional banks—Union Bank of India, Bank of Baroda, HDFC Bank, and Kotak Mahindra Bank—will participate in the pilot.
Technically speaking, the closed user group (CUG), which will be made up of a chosen group of retailers and customers, will be implemented, according to India’s central bank. It states that for the purposes of the pilot, the e-rupee will take the shape of a digital token and be issued in the same denominations as current paper money.
Selected users can interact with the e-rupee through a digital wallet provided by the participating banks which is accessible via mobile devices. The central bank says transactions can be facilitated between individuals or with Person-to-Merchant (P2M) via QR codes provided at locations.
Thirteen cities will be covered during the pilot, but at the start date, only Mumbai, New Delhi, Bengaluru, and Bhubaneswar will be supported, with the rest coming on board subsequently. The RBI confirmed that the CBDC will not bear any interest like cash and can be converted to other forms.
It’s been a long time coming for India
India has been mulling over CBDCs for over a year to mitigate the increasing “cryptoization” of its economy. After months of consultations with relevant stakeholders, the RBI published a 50-page concept note on CBDC and began the pilot of wholesale CBDC on November 1.
The government defended the launch of the wholesale pilot on the grounds that it would reduce transaction costs while being deployed for the “settlement of secondary market transactions in government securities.”
India’s CBDC may not use distributed ledger technology (DLT) as the government has previously disclosed its preference for centrally-controlled conventional database infrastructure.
“Given the above, DLT at this point in time is not considered suitable technology except in very small jurisdictions, given the probable low volume of data throughput,” said RBI.
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