India launched digital rupee. Are Asian countries dominating the e-currency pilot stage?
The Reserve Bank of India (RBI) has launched its first-ever digital rupee. The e-rupee was launched by the Central Bank Digital Currency or CBDC. This initiative by the RBI will be supported by nine other Indian banks including SBI, HDFC, Kotak Mahindra Bank, ICICI, YES Bank, Bank of Baroda, etc. for settling transactions in government securities. ?
CBDC is a legal tender in the digital format; issued by the RBI. Consumers are riddled with various queries as to whether the digital rupee can be exchanged for fiat currency or traditional Indian currency. The answer is yes, the e-rupee can be exchanged for fiat currency.?
Initially, e-rupee is up for purchase for wholesale transactions only, and in a short span, it will be available for retailers as well. ?
As this is a pilot project, it will be disseminated at select locations for a closed user group only. It is to be noted that the RBI intends to extend the e-rupee for international payments as well. With CBDC, the government anticipates cutting transaction costs.?
The RBI’s aim with this particular launch is to ensure a more efficient interbank market.?
2. How different is the e-rupee from cryptocurrency??
A plethora of cryptocurrencies has mushroomed over the past decades. The CBDC is also a virtual currency but there ends the similarity. ?
Private virtual currency does not reflect a person’s debt in any way as there is no issuer.?
The Indian government and RBI have made it amply clear that?private cryptocurrencies never being legal tender, at least not in India. The RBI has been rather skeptical about private cryptocurrency citing grave implications on national security and detrimental to financial stability.?
3. Do Asian countries dominate the e-currency pilot stage??
Did you know that more than 100 companies are exploring Central Bank Digital Currency and almost 10 countries have already launched their respective e-currency? More than 15 countries, including India, are already in their pilot stage. It is interesting to note that it is the developing countries that are leading the way, while developed countries are still falling short.?
Among the bigwigs are China and Russia, in the middle east it is the Kingdom of Saudi Arabia, and Kazakhstan. Singapore, Thailand, Malaysia, Sweden, and South Africa are all piloting their respective central bank-backed digital currencies. ?
These Asian countries have built such robust payment systems that digital currency is anticipated to make the entire digital payments ecosystem more efficient. Additionally, ensuring greater financial inclusion is another goal of CBDC.?
China began its digital currency launch back in 2020 and slowly rolled out the digital yuan country-wide. India is also planning to take a similar route. For highly populated countries like India and China, such stringent measures have to be in place to ensure that all avoidable technical glitches are averted. ?
Let's hope that with the launch of the e-rupee, India will witness greater digital currency acceptance and adoption.