India is one of the fastest-growing digital economies in the world. The country had done more than 88.4 billion digital payment transactions in 2021-2022, while the figures for the beginning quarter of the current financial year show that Indians are now doing an average of 28.8 crore digital transactions every day. To give impetus to this digital and transparent economy, the Reserve Bank of India on 1 November launched the country's first digital currency Central Bank Digital Currency-Wholesale (E-W) pilot project.
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| Reserve Bank launches wholesale e₹, retail soon |
With the launch of the country's digital e₹-W, the Reserve Bank has become one of the few central banks in the world to have taken such an initiative. As a pilot project, it will be used for the settlement of government securities. Based on the success of this pilot project, pilot projects for other large-amount transactions and cross-border payments will also be taken up in the future. Union Finance Minister Nirmala Sitharaman mentioned about digital currency in the budget on 1 February.
Digital e₹ is different from the physical rupee and UPI. The physical currency has to be printed by the government, the user has to keep it with him. Similarly, for UPI transactions, money is required to be kept in a bank account, whereas digital e₹ is not printed and there is no possibility of it getting damaged. It can be stored in the e-wallet. However, for transactions with digital e₹, money will have to be deposited in the bank account or in the form of physical currency.
- Retail e₹ will be launched from select locations RBI has announced that soon a pilot project of retail e₹ will also be launched. It will first start from select locations in closed user groups comprising customers and merchants Separate e₹ for Wholesale and Retail RBI Central Bank Digital Currency (CBDC) will be a separate currency for both wholesale and retail. It is based on Blockchain technology.
- The wholesale currency will be used by financial institutions such as the banking system. Retail e-rupee will be used by people for daily needs in transactions.
- The physical currency is kept in the pocket in the form of notes whereas the e-rupee will remain in the wallet.
In beginning, these banks will be included
The pilot project includes the State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank, and HSBC Bank.
Benefits of e₹
- Digital e₹ is the digital form of the physical rupee. Digital is risk-free and can exchange e₹ with physical currency.
- Dependency on cash will decrease, and the cost of printing notes will be saved. It will also facilitate the creation of a global digital payment system.
- It will help in getting rid of the problem of fake currency
