Digital Currency: The Reserve Bank of India (RBI) announced that the pilot project launch of digital e-rupee parallel to the Indian rupee will be started soon. E-rupee will be special in many cases. The central bank has issued a note on Central Bank Digital Currency (CBDC) to discuss the digital rupee.
RBI has said in the concept note that as the range and scope of such pilot project launches expand, RBI will continue to communicate from time to time about the special features and benefits of e-Rs. E-rupee was first announced by Finance Minister Nirmala Sitharaman during her Budget 2022 speech in February as a legal alternative to digital currency.
Five big things about Digital Rupee
- The e-rupee will be a legal digital currency issued and managed by the Reserve Bank of India. The e-rupee is a central bank digital currency (CBDC) that has the same trading value as a physical currency. According to the concept note of RBI, it can be exchanged with fiat currency on a one-on-one basis.
- The digital rupee or e-rupee will be aligned with India’s monetary policy, which means its transactions will be subject to RBI regulations.
- The central bank has noted that e-Rs will be recognized as a legal tender and medium of payment. Citizens, enterprises and government bodies will also be able to store digital rupees just like banknotes.
- Digital Rupee can be replaced with physical money and cash from banks. This will reduce the cost of issuing funds and transactions.
- The Reserve Bank has said that the e-rupee will act as a convertible legal tender, which will not require the holders to maintain a bank account.
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