E-Rupee’s Journey: Struggles in Trial Phases

Context:

• India’s Central Band Digital Currency i.e., e-rupee has seen very little adoption in its ongoing trial phase.

E-Rupee and UPI: A Close Look at Retail Transaction Preferences

• There is a slow uptake of the Reserve Bank of India’s (RBI) CBDC at the retail level despite the involvement of 13 participating banks.
• The daily transactions of e-rupee are reportedly around in the range of 10,000-12,000, though 3.5 million merchants and 1 million customers were selected for the pilot project across 13 cities. 
• For the retail user, there is nothing that a CBDC brings to the table that the Unified Payments Interface (UPI) does not.

What is CBDC?

• CBDC is a legal tender issued by the RBI in digital form. It is the same as the fiat currency, and is exchangeable one-to-one with the fiat currency. 
• It is a fungible legal tender, for which holders need not have a bank account. 
• CBDC will appear as ‘liability’ (currency in circulation) on the RBI’s balance sheet.
  • A token CBDC is a “bearer-instrument” like a banknote, meaning whoever ‘holds’ the tokens at a given point in time will be presumed to own them.

What is e-rupee?

• The retail CBDC was launched by RBI, is a digital token that will function as the digital equivalent of a banknote that can be transferred electronically from one holder to another. 
• It can be kept in a wallet on a mobile phone, and spent as cash is spent

News Source: Mint

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