Digital rupee: RBI envisions two versions of e-rupee: wholesale for interbank payments and retail for the people. . E-rupee or digital rupee will add to existing money options. It’s similar to banknotes, but digital makes it simpler, quicker, and cheaper, according to the central bank.
The RBI is phasing in a digital money, but there’s no timeline.
“We’re at the vanguard of a watershed shift in currency development that will revolutionize money’s nature and functions,” it stated.
What do we know?
The e-rupee will be distributed in wholesale and retail variants. Commercial banks may distribute RBI-issued digital money. The RBI stated it must be held in a bank or registered service provider’s e-wallet. CBDC will be issued and managed by the central bank, unlike cryptocurrencies.
How? e-rupee works
A token-based mechanism will transmit e-rupees to the public. Digital currency transfers need the recipient’s public key (a sort of digital address). The transfer uses the recipient’s private and public keys.
Unique tokens based on approved methodologies would need to be developed, RBI stated.
Larger transactions may have to be revealed, while smaller ones may stay anonymous, like cash. The RBI opposes e-rupee interest. If the e-rupee generates interest, consumers may withdraw cash from banks and convert them to digital form, harming India’s financial and banking system.