Virendra Pandit
Mumbai: The Reserve Bank of India (RBI) on Tuesday started a pilot program of its Central Bank Digital Currency (CBDC), or e-rupee, allowing nine banks to use it for settling secondary-market transactions in government securities (g-secs).
Finance Minister Nirmala Sitharaman had, in her Budget speech in February, announced that the central bank will, to curb the proliferation of cryptocurrency, will launch CBDC in the current financial year itself.
The e-rupee is set to be test-launched within a month for retail use in select locations and users, the RBI said in a statement on Monday.
The limited roll-out comes a day after Singapore’s monetary authority unveiled trials of a digital version of its local dollar. The central banks of China, the euro area, the Bahamas and others have also been experimenting in the field, while many others are examining ways to quell the threat to global financial stability from privately run digital currencies (cryptocurrencies).
In a concept note recently, the RBI said it “will provide the users with the same experience of dealing in currency in digital form, without any risks associated with private cryptocurrencies.”
Central bank digital currencies, while providing the benefits of virtual currencies, will also ensure consumer protection “by avoiding the damaging social and economic consequences of private virtual currencies.”
In the initial phase, the RBI’s pilot project would be run by the State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank Ltd., Kotak Mahindra Bank, Yes Bank, and IDFC First Bank. and the Indian unit of HSBC Holdings Plc.