The Reserve Bank of India (RBI) will be launching the first pilot of its retail digital rupee today. As per an official statement, the Central Bank Digital Currency (CBDC-R) will be introduced on December 1, 2022, on a pilot basis for the Indian market.
The launch of the retail e-rupee today comes almost after a month since the launch of wholesale digital rupee or CBDC-W. For the purpose of this launch today, RBI has also identified some banks that would engage in phase-wise participation of this trial. Some of these include big names like HDFC Bank, ICICI Bank, State Bank of India (SBI), IDFC First Bank and so on.
Similar to the wholesale e-rupee, the retail e-rupee too is expected to be in the form of a digital token, one that represents legal tender. Since it is similar to physical currency, it is also likely that RBI will issue this CBDC in the same denominations as physical currency currently in circulation.
While many have debated if RBI’s digital currency is similar to crypto, the central bank has clarified that it isn’t. Many experts also support this view as CBDC is considered to be a legal tender as it is backed by a sovereign entity; however, crypto currency is usually not backed by a sovereign entity.
RBI is expected to enable the distribution of retail e-rupee (CBDC-R) through banks. All the transactions in CBDC will be carried out between person-to-person (P2P) and person-to-merchant (P2M) forms. This e-rupee will be in the form of a digital token representing legal tender.
