RBI Proposes Digital Rupee

New Delhi: The Reserve Bank of India (RBI) released a concept note on the digital rupee (e-rupee) wherein the central bank will commence pilot launches of the digital rupee in India. The digital rupee is still in the planning stage and its final shape shall change depending upon the outcome of RBI’s pilot trials.

E-rupee or digital rupee is a digital version of the Indian rupee that RBI is exploring. The RBI has proposed to issue two versions-wholesale for interbank settlement and retail for the public. According to the proposed model, anyone can hold digital rupee in a wallet with a bank or service provider.

The underlying technology of cryptocurrency can underpin parts of the digital rupee system, but it cannot be minned like bitcoin. This shall also imply that environmental and energy use concerns associated with bitcoin are unlikely to afflict the digital rupee.

Earlier in 2020, RBI had set up a working group to study the possibility of Central Bank Digital Currency in India (CBDC) and the launch of CBDC was announced by Indian government in Union Budget 2022.

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