Digital rupee

Digital rupee – India’s first digital rupee has been released. India’s economy has become one step more self-reliant. Digital Rupee will be used for large payments and settlements.

What is CBDC?
Central bank digital currencies aka CBDC are digital tokens (more similar to cryptocurrency) issued by a central bank. They are pegged to the value of that country’s fiat currency. Fiat money is a government-issued currency that is not backed by a physical commodity. 

What is Digital rupee?

Types of CBDC (Digital rupee):-
There will be two types of CBDC.
1) CBDC-W (Wholesale)
2) CBDC-R (Retail)
As per sources, it will be restricted to certain organizations.

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RBI is set to benefit from the launch of Central Bank Digital Currency or CBDC (Digital rupee). This will reduce the pressure on liquid money and the cost of printing money will be reduced too.

RBI has said, “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. Going forward, other wholesale transactions, and cross-border payments will be the focus of future pilots, based on the learnings from this pilot”

On November 1, e-rupees will be introduced on a trial basis for some wholesale transactions. Financial institutions such as Union Bank, State Bank, IDFC First Bank, Bank of Baroda, HSBC, ICICI Bank, Kotak Mahindra Bank, HDFC Bank,Yes Bank will participate in the first phase.

Within a month, trial transactions of the currency for general use between individuals and businesses will begin in some cities. The vertex bank wants to add the benefits of digital currency while keeping the features of normal currency.

In the next phase, trial transactions of the general-purpose currency will begin between selected individuals and businesses in few of the selected cities of the country. Wholesale segment shall commence on November 1, 2022,” the RBI said in a statement on ‘Operationalisation of Central Bank Digital Currency-Wholesale (e ₹-W) Pilot’.

Archit Gupta said, “It will become impossible to avoid the gaze of the government, thus subjecting every transaction to relevant laws within the country. Hence, the government will have better control over how money leaves and enters the country, which would allow them to create a space for better budgeting and economic plans for the future, and overall a much safer environment”. Keep visiting our website to know more.
Written and edited by Rajeshwari.

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