homemarket Newscurrency News

Digital rupee pilot project launching on Dec 1 — Here's how it's different from cryptocurrency

Digital rupee pilot project launching on Dec 1 — Here's how it's different from cryptocurrency

Digital rupee pilot project launching on Dec 1 — Here's how it's different from cryptocurrency
Read Time2 Min(s) Read
Profile image

By Anshul  Nov 30, 2022 12:03:34 PM IST (Updated)

Follow real-time updates on Union Budget 2023Catch exclusive videos on Union Budget 2023 from CNBC-TV18

Central Bank Digital Currency (CBDC) is a digital form of legal tender issued by the Reserve Bank of India (RBI). Read this to understand everything about RBI's new project

The Reserve Bank of India (RBI) on Tuesday said it will launch the first pilot for retail digital rupee (e₹-R) on December 1, 2022, in which four banks including SBI and ICICI Bank will initially participate. On November 1, the RBI had launched the first pilot in the digital rupee - wholesale segment.

Recommended Articles

View All

Announcing the operationalisation of Central Bank Digital Currency – Retail (e₹-R) Pilot, the RBI said the pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants.
"The e₹-R would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued," it said.
It would be distributed through banks and users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones/devices.
What exactly is digital currency?
Central Bank Digital Currency (CBDC) is a digital form of legal tender issued by the Reserve Bank of India (RBI).
Can it be exchanged for fiat currency?
Yes, it can be one-for-one as it is a digital form of fiat currency, i.e. the Indian rupee.
Will it be available to all?
It will be initially available for the wholesale segment and extended to the retail category in a month.
What will be the prime focus of the launch?
Going forward, future pilots will focus on wholesale transactions and cross-border payments based on the pilot's learnings. Settlement in central bank money would reduce transaction costs.
What are the expectations of RBI?
According to the RBI, using the digital rupee in the wholesale segment is expected to make the interbank market more efficient.
How will it be different from cryptocurrency?
CBDC is a digital or virtual currency, but it is not comparable to the private virtual currencies or cryptocurrencies that have mushroomed over the last decade. Private virtual currencies do not represent any person's debt or liabilities as no issuer exists.
The government has already said that private cryptocurrencies will never be legal tender. The RBI has been strongly opposing private cryptocurrencies as they could have implications on national security and financial stability. This is not the case with digital currency.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!

Top Budget Opinions

    Most Read

    Market Movers

    View All
    Top GainersTop Losers
    CurrencyCommodities
    CompanyPriceChng%Chng