RBI To Soon Release e₹, releases Concept Note on Central Bank Digital Currency
The Reserve Bank of India (RBI) has issued the concept note on Central Bank Digital Currency.The Reserve Bank will soon commence pilot launches of e₹ for specific use cases.Central Bank Digital Currency (CBDC) is a digital form of currency notes issued by a central bank. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance...
The Reserve Bank of India (RBI) has issued the concept note on Central Bank Digital Currency.
The Reserve Bank will soon commence pilot launches of e₹ for specific use cases.
Central Bank Digital Currency (CBDC) is a digital form of currency notes issued by a central bank. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance are specific to each country's unique requirements.
The Concept Note explains the objectives, choices, benefits and risks of issuing a CBDC in India, referred to as e₹ (digital Rupee). The e₹ 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 Concept Note also discusses key considerations such as technology and design choices, possible uses of the Digital Rupee, issuance mechanisms, etc. It examines the implications of the introduction of CBDC on the banking system, monetary policy, and financial stability, and analyses privacy issues.
CBDC would only have benefits if the general public and businesses hold it and use it to make payments. This means they must switch some of their funds out of banknotes and commercial bank deposits into central bank money in the form of CBDC. But the switching from deposits to CBDC can have potentially significant implications on the banking system, monetary policy and financial stability.
Dated: 7 October 2022