India's digital rupee's retail pilot on December 1, says RBI
The Reserve Bank of India (RBI) is all set for the first pilot of the retail version of its Central Bank Digital Currency (CBDC). It will take place on December 1, the central bank said in a statement. The pilot of the wholesale e-Rupee was launched on November 1. In the initial part of the retail pilot, four cities will be included.
Why does this story matter?
- India is all set to become one of the few countries in the world to enter the pilot stage of retail CBDC. Since RBI announced its detailed plans to introduce CBDC last month, things have been moving quite fast.
- The pace of development shows that India doesn't want to be left behind in the next big thing. So far, it's working well.
Four banks and cities will be part of initial phase
The pilot of the retail e-Rupee would cover select locations and closed groups, said RBI. It will be issued in the same denominations as paper currency and coins are issued currently. The digital currency will be distributed through intermediaries such as banks. Users will be able to transact e-Rupee using a digital wallet provided by participating banks.
The pilot will be expanded to more cities later
In the initial phase State Bank of India, ICICI Bank, IDFC First Bank, and Yes Bank will participate. Subsequently, Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank will join the list. The pilot will be first launched in New Delhi, Bengaluru, Mumbai, and Bhubaneshwar. It will be expanded to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
e-Rupee will offer settlement finality like physical cash
The retail e-Rupee can be used for person-to-person (P2P) and person-to-merchant (P2M) transactions. P2M transactions can be done by using scanning QR codes. Like physical cash, e-Rupee will also offer "trust, safety, and settlement finality." It can be converted to other forms of money, like bank deposits. The pilot is to test the robustness of digital rupee creation, distribution, and retail usage.
CBDC is the next step in sovereign currency's evolutionary process
CBDC is the next step in the evolution of sovereign currency. India's central bank sees a lot of potential in digital currency. It expects that e-Rupee will not only decrease the reliance of Indians on fiat currency but will also protect people from the volatile private cryptocurrency. RBI has decided to go for a phased implementation to understand how people react to different features.