India’s e₹ (Digital Rupee) - Wholesale CBDC and/or Retail CBDC

India’s e₹ (Digital Rupee) - Wholesale CBDC and/or Retail CBDC

          The concept paper mentions the types of CBDC or e₹ (Digital Rupee)

 that are planned for India.

          As the issuance date comes closer, there may be more clarity on the exact types of CBDCs which can be seen in our country.

          As of now, the following CBDC types are in pipeline: -

Wholesale CBDC and/or Retail CBDC:  

Highlight A) As the word denotes, Wholesale e₹ (Digital Rupee) is for low volume, high value transactions.

Highlight B) As the word denotes, Retail e₹ (Digital Rupee) is for high  volume, low value transactions

Retail currency is used to pay for things, to send money to friends and family, and to receive government incentives and subsidies

 Wholesale currency is used by financial institutions to buy and sell financial assets and interbank settlement

 

Type of CBDC to be issued

CBDC can be classified into two broad types viz.

general purpose or retail (CBDC-R) and wholesale (CBDC-W).

 

Wholesale CBDC - Restricted access to select financial institutions.

Retail CBDC – Access to all viz. private sector, non-financial

consumers and businesses

Wholesale CBDC – Primarily for settlement of interbank transfers and related

wholesale transactions

Retail CBDC - An electronic version of cash primarily meant for retail transactions.

Retail CBDC - It is believed that Retail CBDC can provide access to safe money for payment and settlement as it is a direct liability of the Central Bank.

 

Wholesale CBDC – Wholesale CBDC has the potential to transform the settlement systems for financial transactions and make them more efficient and secure.

CBDC-W could also be explored for the following:

1. Wholesale market for asset classes that are OTC and bilaterally or settled outside CCP arrangements- CPs, CDs, etc.

2. Access to retail for buying assets such as G-secs, CPs/CDs, primary auctions etc bypassing the bank account route

The best example of Retail CBDC is UPILite

As and when the final guidelines are released by Reserve Bank of India, it will be clear which type of e₹ (Digital Rupee) will be introduced in India.

As per the concept paper, both Wholesale and Retail e₹ (Digital Rupee) may be introduced in India.

 

So, what is your choice? Wholesale e₹ (Digital Rupee) or Retail e₹ (Digital Rupee)

  or a combination unique to India.

A unique combination that can be replicated across the world, just like UPI.

 

 

Disclaimer: These are my personal views only. The bottom line is Safe ePayments. Nothing More – Nothing Less.

I am solely responsible for errors, if any.

Copyrights, if any belong to the original copyright holder only.