Winning Bizness Desk
Mumbai. The Reserve Bank of India on 7 October announced that the pilot project launch of digital e-Rupee will be started soon, besides, it also released a concept note on Central Bank Digital Currency (CBDC) to discuss the digital rupee. This concept note has been issued with the aim of spreading awareness among the people, so that people can be made aware about the right way of digital currency. Along with this, RBI has talked about pilot launch of E-Rupee parallel to Indian Rupee. The plan being prepared by the RBI for the launch of e-rupee. According to the information given by the bank, plans are being made to launch e-rupee as a pilot.
Pilot project to start in four public sector banks
The RBI has indicated about two broad categories - retail and wholesaler - for the use of e-rupee. The concept note discussed issues such as technology and design options of digital currency, use of digital currency and issuance mechanism of digital currency. In addition, it examines the implications of the introduction of CBDCs on the banking system, monetary policy and financial stability. It also analyzes privacy issues. State Bank of India, Punjab National Bank, Union Bank of India and Bank of Baroda have been involved for the pilot project.
Benefits of digital currency
After the introduction of digital currency, there will be no need to keep cash and it will work like a mobile wallet. Interest will also be earned on keeping it. The digital currency can be held in a mobile wallet or account. Along with this, its use will also reduce the use of paper currency. CBDC can also be used without internet.
Two models for CBDCs
According to RBI, there are two models for issuance and management of CBDCs – direct model (single-tier model) and indirect model (two-tier model). In the direct model, the central bank would be responsible for managing all aspects of the digital rupee system. Whereas, the indirect model would be one where the central bank and other intermediaries each play their respective roles.