India will soon test the ‘E-Rupee’ digital currency backed by India’s central bank; the national cryptocurrency will be tested in limited pilot launches. The Reserve Bank of India (RBI) has announced a phased pilot of its version of Central Bank Digital Currency (CBDC), said the paper released on Friday.
In what was referred to as a “concept note,” RBI outlined its vision for a digital version of the rupee, calling it the e-rupee. RBI also explained its rationale for implementing a central bank digital currency and how it would be tested in distinct phases.
The RBI plans on rolling out the e-rupee in limited pilot launches, with the intent of implementing it as an additional form of currency issued alongside paper money. The paper states the e-rupee will also serve as an alternative to cryptocurrencies.
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CBDCs will provide the public with the advantages of virtual currencies while ensuring consumer protection by avoiding the damaging economic and social consequences of private virtual currencies.
The central bank is considering the release of two versions of a CBDC: one that people would use for making retail payments and another that would be used for settling transfers between banks and wholesale transactions. According to the RBI, a CBDC could make payments more efficient, robust, and trusted.
The Indian government first announced its plans to launch a CBDC in February, stating the technology would substantially boost the country’s economy.