Why Introducing Retail E Rupee is a Huge Step Forward for RBI?

    The Reserve Bank of India (RBI) plans to introduce the Central Bank Digital Currency for retail sales. Almost a month after the commercial e-rupee introduction, CBDC-R, or retail e rupee, launched. Retail e-rupee of RBI will be released in four metropolitan cities, including Delhi and Mumbai, in a manner comparable to the latter’s introduction.

    According to official updates, the RBI’s digital money India project would encompass a few sites in a closed user group, consisting of engaged customers and merchants, as it is the pilot launch of CBDC-R. Some institutions, including the State Bank of India (SBI), ICICI Bank, IDFC Bank, HDFC Bank, and others, are anticipated to participate in the initial phase.

    So, what is e rupee? According to RBI, the e rupee is just an existing digital version of the Indian rupee. The central bank commented on its reasons for implementing the CBDC, its design, and different technical concerns. In addition to the policy aspects of this significant move in its concept note, the previously Indian digital currency launch date was October 7.

    However, the Reserve Bank of India’s adoption of CBDC has generated some controversy because initially, it was believed that the central bank wished to outlaw the use of cryptocurrency. Understanding what CBDC or e-rupee is and how it differs from crypto and UPI payments, among other things, is even more crucial.

    The Central Bank Digital Currency -What is it?

    The central bank of a sovereign nation issues or backs CBDC, a digital rupee. If you want to know what is digital rupee? Then according to the CBDC definition, it must be acknowledged that this digital currency is fully convertible against the actual money that was already in use and released from the same central bank. However, it is not the same as actual money. The fact that CBDCs cannot be destroyed or destroyed in any physical form makes them one of the main contrasts between them and actual money. Digital rupee price is not known till now.

    Regarding CBDC kinds, digital currency has two varieties under the RBI’s e rupi pilot programme: retail (CBDC-R) and wholesale (CBDC-W). According to recent updates, CBDC-R will launch on December 1 and be used for retail transactions, while CBDC-W was previously released the previous month and is utilized for interbank and other wholesale transactions.

    E Rupee/CBDC from RBI Compared Cryptocurrencies and UPI.

    As previously indicated, there was once a perception that the central bank thought cryptocurrency risky and should not be encouraged. Since cryptocurrencies are gaining popularity, the Centre also slapped high taxes on them. With the introduction of CBDC, at least one difference became apparent, and it is possible that CBDC is not the same as cryptocurrency. Let’s examine the distinction-

    The distinction between cryptocurrency and CBDCs is that a central bank or a sovereign state supports the earlier.

    In contrast, the latter is viewed as personal funds that are not supported by any sovereign body. Payment settlement occurs instantly in both CBDC and cryptocurrency. Therefore, there isn’t much of a variation in terms of payments.

    In terms of UPI transactions, the reconciliation of transactions takes place between two banks on the backside. However, because money is configurable, settlements occur instantly with CBDC and cryptocurrency.

    While RBI is prepared to implement CBDC, particularly the retail e-rupee, many people are still sceptical about the decision because of the dangers involved.

    The Problems with CBDCs

    Data privacy and financial stability are two of the most frequent issues linked with CBDC because it is a type of digital money. According to experts, despite investigating CBDC, many governments have not yet implemented it since privacy and cyber security is major concerns.

    It is also acknowledged that since the web still exists, CBDCs can gather private user and payment information. If the data ever falls into the wrong hands, it can easily be used to monitor secretive business dealings, protect confidential information, and even commit online crimes. Therefore, it is thought that implementing security standards is essential to reducing risks when implementing CBDCs.

    The concept of the e rupee is opposed by certain people. They claim that digital currencies will allow central banks to control the national economy. If authorities deem specific economic activity to be illegal, this can inhibit economic growth. Digital currencies also cannot take the place of private cryptocurrencies, which are in demand from some investors due to their higher buying power than fiat money

    Also Read: India’s Digital Payments Business Reaches Rs 38.3 Lakh Crore

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    Josie Patra
    Josie Patra is a veteran writer with 21 years of experience. She comes with multiple degrees in literature, computer applications, multimedia design, and management. She delves into a plethora of niches and offers expert guidance on finances, stock market, budgeting, marketing strategies, and such other domains. Josie has also authored books on management, productivity, and digital marketing strategies.

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