The Reserve Bank of India on Friday announced that the pilot launch of the e-rupee, the digital equivalent of the Indian rupee, will begin soon. The upcoming e-rupee will be useful in specific cases, which will be a part of the pilot programme. The central bank has released a concept note on Central Bank Digital Currency (CBDC) to discuss the key ideas for a digital rupee.
“As the range and scope of such pilot launches expands, RBI will continue to communicate from time to time the specific features and benefits of e-Rs,” RBI said in the concept note. E-rupee was first announced by Finance Minister Nirmala Sitharaman during her Budget 2022 speech in February as a legal alternative to digital currency. As the pilot program for the launch of e-Rs in India begins, here are five key things to know:
- The e-rupee will be a legal digital currency issued and managed by the Reserve Bank of India. The e-rupee is a central bank digital currency (CBDC) that has the same trading value as a sovereign currency. According to the RBI concept note, it can be exchanged with fiat currency on a one-on-one basis.
- The digital rupee or e-rupee will be in line with India’s monetary policy, which means its transactions will be subject to RBI regulations, such as deductions, if any. It will appear as a liability on the balance sheet of the central bank.
- The central bank has noted that e-Rs will be recognized as a legal tender and medium of payment. Citizens, enterprises and government bodies will also be able to store the digital rupee just like banknotes.
- The digital rupee will be convertible against physical money and cash from banks. This will likely reduce the cost of issuing funds and transactions as it eliminates the need for the existence of a physical form.
- The Reserve Bank has said that the e-rupee will act as a convertible legal tender which will not require the holders to maintain a bank account.
After the announcement of the e-rupee digital currency: 5 key things that first appeared on BGR India.