The Reserve Bank of India has today released a Concept Note on Central Bank Digital Currency (CBDC) for India.
“The Reserve Bank will soon commence limited pilot launches of e₹ for specific use cases. It is expected that this note would facilitate a deeper appreciation and understanding of the digital Rupee and help members of the public prepare for its use”, the Central bank’s statement said.
“The Reserve Bank’s approach is governed by two basic considerations – to create a digital Rupee that is as close as possible to a paper currency and to manage the process of introducing digital Rupee in a seamless manner”, it said.
Central Bank Digital Currency (CBDC) is the digital form of currency notes issued by a Central Bank of a country. All over the world, many central banks are exploring the issuance of CBDC. However, the key motivation for its issuance is specific to each country’s unique requirement.
The Concept Note released by RBI explains the objectives, choices, benefits, and risks of issuing a CBDC in India referred to as e₹ (digital Rupee). The e₹ will provide an additional option to the currently available forms of money. It is substantially not different from banknotes, but being digital it is likely to be easier, faster, and cheaper. It also has all the transactional benefits of other forms of digital money.
“The purpose behind the issue of this Concept Note is to create awareness about CBDCs in general and the planned features of the digital Rupee, in particular,” RBI said.
The Concept Note pursues to clarify Reserve Bank’s approach towards the introduction of the digital Rupee. The Concept Note also discusses key considerations such as technology and design choices, possible uses of the digital rupee, issuance mechanisms, etc. It examines the implications of the introduction of CBDC on the banking system, monetary policy, and financial stability, and analyses privacy issues.
