India's trials of its digital currency eRupia are already in its advanced stages, paving the way for its widespread adoption and use in the coming months. In a new development, RBI Governor Shaktikanta Das revealed some more intricacies about the eRupee while also hinting at what RBI has in plans for this CBDC in the near future. Central bank digital currency, or CBDC, is the digital representation of a fiat currency such as the rupee, supported by blockchain networks.
Das was speaking at the BIS Innovation Summit 2024 in Basel, Switzerland, when he said that India's CBDC would offer the same privacy for transactions that cash notes offer.
“The basic principle is that CBDC can have the same degree of anonymity as cash, no more and no less. Anonymity can be addressed through legislation and/or technology. For example, by permanently removing transactions,” Das told the media.
India launched its CBDC with a trial phase in November 2022. Since then, eRupee has been continuously tested in retail environments, powered by various public and private sector banks operating in India . In recent months, banks like ICICI have stepped up promotions for the digital rupee.
People interested in experimenting with eRupee can do so by contacting their banks' official apps or taking any necessary assistance from their assigned bank relationship manager. Essentially they would have to convert some of their money to the CBDC and store the eRupee in their digital wallets, provided by the banks.
The Government of India has enabled CBDC interoperability with existing QR codes used for UPI payments. With this, CBDC holders can scan the code provided by merchants or peers and pay them in the form of eRupee.
According to Das, “The benefits of CBDCs will be more visible when we enable offline usage and programmability features. A key objective of the pilots is to study the change in consumer behavior towards bank deposits. We need many more transactions to understand its wider economic effects, particularly on monetary policy and the banking system.”
In February this year, the RBI had said that CBDC transactions brought Rs. 5.70 crore in the first four months since it entered retail testing in 2023.
Earlier in April, the RBI proposed the expansion of CBDC deployment within the retail ecosystem beyond banks. This essentially meant that the apex bank had decided to start circulating the digital rupee through non-banking payment system operators.
Das, earlier this year, had also revealed that the RBI plans to experiment with offline solutions to boost CBDC adoption in those parts of India that are not as well connected to the internet as developed cities.
