In a concept note on its digital currency released on Friday, the Reserve Bank of India announced that it would shortly start a pilot launch of the E-Rupee for particular use cases. The central bank stated in a statement that the idea behind the concept note’s release is to raise awareness about the central bank’s digital currency and the qualities that the digital rupee would have.
The RBI stated in a statement that “the concept note also examines crucial factors such as technology and design choices, potential uses of the digital rupee, and issuance methods, among others.”
Here are the concept notes on digital currency’s main points from the RBI:
1. According to the concept note, central bank E-Rupee is a sovereign currency that issuing central banks issue in accordance with monetary policy. On the balance sheet of the central bank, it will show up as a liability.
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2. All individuals, businesses, and governmental organizations must recognize the digital currency as a form of payment, legal tender, and a secure place to hold value.
3. Both cash and commercial bank currencies will be readily convertible into the digital currency. It will be fungible legal currency, and owners are not need to have a checking account.
4. It’s anticipated to make transactions and money issuance less expensive. The central banks are currently attempting to spread acceptance of a more acceptable electronic form of cash in light of the declining use of paper money.
5. India’s state-of-the-art payment systems, which are affordable, accessible, convenient, safe, and secure, will enable the central bank’s digital currency. According to the RBI concept note, the e-rupee will boost India’s digital economy, improve financial inclusion, and improve the efficiency of the monetary and payment systems.
6. The platform for the digital currency should be designed to be extremely scalable so that it can sustain very high transaction volumes and rates without suffering performance deterioration. It should be strong to guarantee the stability of the financial ecosystem, and among other aspects, contain tamper-proof access control methods and cryptography for data security.
7. Citing security concerns, the RBI concept note argues that central bank digital currency ecosystems may be susceptible to cyberattacks on a par with those that affect the current payment systems: “The cybersecurity considerations need to be taken care of both for the item and the environment.
8. Massive amounts of data are anticipated to be generated in real time by the central bank’s digital currency. “After taking into account the issues with anonymity, adequate analyses of Big Data produced by CBDC can aid in the development of evidence-based policy. According to the concept note, it might also develop into a valuable data source for service providers who offer financial product insights.
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9. The RBI emphasizes the importance of consumer protection, describing it as a key pillar of financial stability. The central bank has asked for a framework for consumer protection that takes into account the differences in consumer digital literacy as well as strategies for enhancing consumer knowledge and transparency.
