In a press note released yesterday, the Reserve Bank of India (RBI) has announced the beginning of the first pilot of the digital Rupee, called e-Rupee in India. The test area for the pilot is limited to the secondary market where settlement for government securities will be done using the digital rupee. The pilot begins November 1, 2022, and several public and private banks have been onboarded.
The press note from RBI states: “The use case for this pilot is settlement of secondary market transactions in government securities. Use of e₹-W is expected to make the inter-bank market more efficient. Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk.”
In near future, new pilots will focus on other wholesale segments, and cross-border payments are also being considered for inclusion in the pilot after the first pilot outcomes are known and learnings taken into account.
The nine banks onboarded for the first pilot study are: State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC.
RBI will also be launching the first pilot for retail in a month’s time, says the press note. The e₹-R or the erupee will be tested in select locations and closed user groups, which will include customers and merchants. More details are awaited on the same.
The CBDC of India, using blockchain and cryptocurrency technology, is expected to put the country on the forefront after the disruptions and threats posed by cryptocurrencies like Bitcoin, Ethereum and other tokens. While Bitcoin runs on a completely public blockchain with open-source software, there are also coins and tokens that use private or hybrid blockchains, which involve various degrees of public and private access and control.
Over a hundred countries around the world are currently in the race to launch their central bank digital currency, and several are currently in the pilot phase. Two countries have already launched their CBDC – Jamaica’s Jam-Dex, and the Sand Dollar of The Bahamas. Nigeria too has a national digital currency called the e-Naira.
Read more: The current status of CBDCs around the world
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