Reserve Bank of India has finally launched its pilot programme for the e-rupee, India’s own Central Bank Digital Currency. The programme, which commences on November 1, will be India’s first e-currencies. Over the past few years, several central banks around the world have jumped on to the CBDC bandwagon, researching the feasibility of digital currencies, and figuring out the best way to put them to practice.
As per RBI, e-rupee will simply be a digital form of the Indian rupee that is already in use. The central bank released their concept note regarding CBDCs on 7 October. In the document, the central bank has laid down their motivations behind introducing the e-rupee, the design and technological considerations that go into it, as well as the policy aspects of bringing about such a drastic shift in India’s monetary transactions.
Numerous significant problems are raised by the advent of CBDCs in India. What is to be inferred from the central bank’s action in a nation that has sought to outlaw the use of cryptocurrencies? Not to mention, the finance minister Nirmala Sitharaman herself has stated that CBDCs will be fully established in India by 2023. She had earlier urged the public to take prudence when dealing in cryptocurrencies. This underscores the significance of understanding what CBDCs are, how they differ from cryptocurrencies and UPI transactions, as well as the safety issues related to them.