RBI has launched the first pilot of its Digital Rupee (e₹) in India. The pilot is for the wholesale segment (inter-bank market) and will be used for settlement of secondary market transactions in government securities. RBI believes that the use of e-Rs will make the inter-bank market more efficient.
Digital Rupee (E₹) trial begins for wholesale segment
On the first day, bonds worth crores were traded using this new e₹. There are nine public and private banks participating in the business. State Bank of India, Union Bank of India, Bank of Baroda, Kotak Mahindra Bank, HDFC Bank, ICICI Bank, IDFC Bank, HSBC Bank and Yes Bank are the identified banks that participated.
This pilot will help RBI learn more about the digital rupee and possibly roll-out for the retail segment. As promised, the rollout for the retail segment is planned within a month in select locations comprising merchants and customers in closed user groups.
The retail segment rollout of the digital rupee will come under CBDC-R (Central Bank Digital Currency), while the pilot that was launched today comes under CBDC-W for the wholesale segment.
Upon a successful pilot, a complete rollout is expected to ensure complete transparency while maintaining low operating costs.
The Digital Rupee, denoted as E ₹, is a digital currency, but it is nothing like a cryptocurrency. Cryptocurrency is a decentralized digital asset that works on blockchain technology. On the other hand, Digital Rupee is fiat money in digital form.
It has its own intrinsic value in the sense that having a digital rupee would be equivalent to having a physical rupee. That said, it will not be a replacement, but a substitute for physical currency.
“E ₹ will provide an additional alternative to the forms of funding currently available. It is not much different from banknotes, but it is likely to be easier, faster and cheaper as it goes digital. It also has transactional advantages over other forms of digital currency,” stated the concept note on Central Bank Digital Currency by RBI.
RBI launches first pilot of Digital Rupee (E ₹) for wholesale segment: All the details here first appeared on BGR India.