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India's Digital Rupee: CBDC's Promising Journey.



  Sep 21, 2023

e-Rupee/Digital Rupee/CBDC



The digital rupee, India’s central bank digital currency (CBDC), is on its journey to potential success.

Here's an organized overview:
Launch Date: Launched in November 2022 as a pilot project by the Reserve Bank of India (RBI) initially in the wholesale segment,
followed by the retail segment a month later.
 
Volume in Circulation: By March 31, 2023, the digital rupee's total value in circulation reached Rs 16.4 crore,
with Rs 5.7 crore in the retail segment, although this is a pilot and not comparable to physical currency.
 
Operation: Distributed through banks in the retail segment, with tokens issued by RBI stored in digital wallets for transactions.
Advantages: Expected to bring cost efficiency, eliminate settlement risk, offer trust and safety of physical cash, and be programmable for specific uses.
 
Difference from Cryptocurrencies: Backed by the central bank, providing value equivalence to the official currency.
 
Current Status: Wholesale version planned for interbank market introduction by October.
Retail pilot expanding to more banks, cities, and use cases.
 
Comparison with UPI: Similar to UPI but with an offline feature for remote areas with limited connectivity.
 
Global Landscape: CBDCs gaining momentum worldwide, with 11 countries already launching digital currencies.
 
The digital rupee's success hinges on factors like adoption, user-friendliness, and complementing existing digital payment systems like UPI.
Its potential lies in offering efficiency and convenience, with widespread acceptance determining its long-term viability.


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