Reserve Bank of India – Central Bank Digital Currency – Move to Reality from FinFiction

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With the release of the Concept Paper on ‘CBDC’, by RBI, the movement of CBDC from FinFiction to reality has begun.

          India’s CBDC is named e₹ (digital Rupee)

          The Concept paper is the first step toward the issuance of e₹ (digital Rupee).



Q: What is CBDC?

Ans: Central Bank Digital Currency (CBDC) is a digital form of currency notes issued by a central

bank. It is akin to sovereign paper currency but takes a different form, exchangeable at par with the existing currency, and shall be accepted as a medium of payment, legal tender and a safe store of value.

Q: How will e₹ (digital Rupee) appear on the Reserve Bank of India’s Balance Sheet?

Ans: e₹ (digital Rupee)’s will appear as a liability Reserve Bank of India’s Balance Sheet

 

Q: Are the CBDCs standard across all central banks?

Ans: No, the CBDCs are not standard across all central banks. Each central bank finetunes the CBDCs as per their unique requirements.

Q: What is the name of the planned CBDC in India?

Ans: As of now, the planned name is e₹ (digital Rupee).

Q: What are the highlights of this Concept Note?

Ans: The highlights of this Concept Note are: the objectives, choices, benefits, and risks of issuing a CBDC in India, now referred to e₹ (digital Rupee).

Q: What is a Concept Paper?

Ans: A concept paper is a short document written by a researcher before starting their research project, with the purpose of explaining what the study is about, why it is important and the methods that will be used.

Simply put, a concept paper is a preliminary document that sets out to explain what a proposed study is about, why it is being undertaken, and how it will be carried out.

Q: Will the e₹ (digital Rupee) be the only option for Money in India?

Ans: No e₹ (digital Rupee) will provide an additional option to the currently available forms of money.

Q: Is e₹ (digital Rupee) different from the existing banknotes?

Ans: No, e₹ (digital Rupee) is substantially not different from banknotes, but being digital it is likely to be easier, faster, and cheaper.

It also has all the transactional benefits of other forms of digital money.

Q: What is the purpose of this Concept Note:

Ans: The purpose behind the issue of this Concept Note is to create awareness about CBDCs in general and the planned features of the digital Rupee, in particular.

The Note also seeks to explain Reserve Bank’s approach toward the introduction of the digital Rupee.

Q: What are the basic considerations of RBI in its approach to CBDC?

Ans: Reserve Bank’s approach is governed by two basic considerations – to create a digital Rupee that is as close as possible to a paper currency and to manage the process of introducing digital Rupee in a seamless manner.

Q: Will ER be only an Online Mode or will it be available in Offline Mode?

Ans: As per the concept, the e₹ (digital Rupee) may be available in Offline Mode too.  “The use of offline feature in CBDC would also be beneficial in remote locations and offer availability and resilience benefits when electrical power or mobile network is not available”

 

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

  

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