The Dawning Era of India’s Digital Currency

Prof. Debidutta Pattnaik

Finance & Economics

 

Striding a step closure to the dream of cashless India, the Reserve Bank of India (RBI) experiments its first pilot launch of electronic rupee (e₹) in the cities of Delhi, Mumbai, Bangalore, and Bhubaneswar on December 1, 2022. The e₹ is the central bank’s digital currency issued by RBI. Like the physical cash we hold in our wallets, the e₹ is held electronically.

Being a sovereign currency, CBDC has many advantages over the already existing digital payments systems such as seamless, real-time, and cost-effective cross border payments. Given the extensive cost of physical cash management of about 5000 crores incurred between April 1, 2021 and March 31, 2022, CBDC offers the noted benefits of zero cost in printing, storage, transportation, and replacement of bank notes. Such benefits (in)directly percolate to the public, businesses, banks, and the Central Bank who would otherwise bear the costs in obtaining the physical currency.

In most part of the world due to the lack of a precedence, CBDC is in its nascent stage of conceptualization, development, and/or pilot launch. Hence, extensive stakeholder consultation along with iterative technology design are prima facia to meet the public requirements. However, as per RBI, for a country like India supported by accessible, affordable, convenient, efficient, safe and secure state-of-the-art payment systems, the e₹ will bolster India’s digital aspirations, enhance financial inclusion, and make the monetary and