The Reserve Bank said on Friday that it will soon begin the pilot launch of an e-rupee for specific use cases in order to increase India''s digital economy, improving payment methods and preventing money laundering.
The RBI stated that CBDC is aimed to complement the current forms of money rather than replace them in a concept note, indicating that it would provide an additional payment option to users rather than replace the existing payment methods.
"The Digital Rupee system, funded by state-of-the-art payment systems in India, will further strengthen India''s digital economy, strengthen the monetary and payment systems more efficient, and increase financial inclusion."
CBDC is a digital form of currency notes issued by a central bank. While most central banks across the world are considering the issuance of CBDC, the main motives for its issuance are specific to each country''s unique requirements.
In the Union Budget submitted to Parliament on February 1, 2022, the Government of India had announced the launch of the Digital Rupee a Central Bank Digital Currency (CBDC) from fiscal year 2022-23.
"The Reserve Bank will soon begin pilot launches of e-rupee for specific use cases," said the head of the CBDC. In two large capacities, the retail CBDC would be possible for use by everyone, while wholesale CBDC is designed for restricted access to select financial institutions.
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"For CBDC to play the role as a medium of exchange, it must incorporate all the features that physical currency provides, including anonymity, universality, and finality," the statement said.
According to the report, more than 60 central banks have expressed interest in CBDC with a few implementations already under way across the retail and wholesale sectors, and many others are exploring, testing, and/or developing their own CBDC framework.
The concept note reveals the context, motivation, and choices of design features, and other policy frameworks for the country''s e-rupee system.
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It aims to develop an inclusive, interoperable, and innovative CBDC system that will meet India''s requirements in the modern digital economy.
A study also emphasized that the possibility of monetary policy having a CBDC introduction is still vague and purportedly speculative given that only limited CBDCs are currently in existence as few countries have issued until today.
"It may also be a powerful data source for financial product providers. "It would be especially useful in enforcement of money laundering regulations," the report says.
The purpose of the issue of this concept note is to improve awareness about CBDCs in general and the expected features of the digital rupee, in particular.
The note seeks to clarify the Reserve Bank''s approach to the introduction of the digital Rupee.
The Reserve Bank claims that it''s approach is guided by two key elements to create a digital Rupee that is as close as possible to a paper currency and to manage the process of introducing a digital rupee in a smooth manner.