The Reserve Bank of India (RBI) is all set to launch the first pilot of the Digital Rupee for the wholesale segment (e₹-W) on Tuesday, November 1. As per the RBI statement issued on Monday, the e₹-W use case for this pilot is the settlement of secondary market transactions in government securities. With the e₹-W pilot, India will join several other countries, including neighbouring Pakistan and China in bringing out its own digital currency — which will be issued by the RBI — in order to tap into the fast growing cryptocurrency space.
“Use of e₹-W is expected to make the inter-bank market more efficient. Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk. Going forward, other wholesale transactions and cross-border payments will be the focus of future pilots, based on the learnings from this pilot,” the RBI statement said.
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A total of nine banks including State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC have been identified by the RBI for participation in the pilot programme.
As per the RBIthe Digital Rupee will offer an additional option to fiat currency. Unlike regular cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), or Dogecoin (DOGE), the value of the Digital Rupee will not depreciate or appreciate with time. Essentially, the e₹ is not different from regular banknotes — except that it will be digital in form. The RBI said that since the e₹ is digital, it will be “easier, faster, and cheaper” and have all the “transactional benefits of other forms of digital money.”
RBI further in the statement said the first pilot in Digital Rupee – Retail segment (e₹-R) is planned for launch within a month in select locations in closed user groups comprising customers and merchants.
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