RBI launches digital currency, will soon begin e-rupee
08 Oct 2022 11:41:49
New Delhi, Oct 08: The Reserve Bank of India on Friday released a concept note on its digital currency, stating that it will soon begin the pilot launch e-rupee for specific use cases.
In a statement, the central bank said the purpose behind the issue of the concept note is to create awareness about the central bank digital currency and the planned features of the digital rupee.
“The concept note also discusses key considerations such as technology and design choices, possible uses of the digital rupee, and issuance mechanisms, among others”, the RBI said in a statement. The concept note states that the central bank digital currency is a sovereign currency issued by the central banks in alignment with the monetary policy. It will appear as a liability on the central bank's balance sheet. Digital currency must be accepted as a medium of payment, legal tender, and a safe store of value by all citizens, enterprises, and government agencies. The digital currency will be freely convertible against commercial bank money and cash. It will be a fungible legal tender for which holders need not have a bank account. It is expected to lower the cost of the issuance of money and transactions. Faced with a dwindling usage of paper currency, central banks are now seeking to popularise a more acceptable electronic form of currency. The central bank's digital currency will be supported by the state-of-art payment systems of India that are affordable, accessible, convenient, safe, and secure. The RBI concept note says the e-rupee will bolster India's digital economy, enhance financial inclusion and make the monetary and payment systems more efficient. The digital currency should be developed as a platform that is highly scaleable to support a very high volume and rate of transactions without performance degradation. It should be robust to ensure the stability of the financial ecosystem and have tamper-proof access control protocols and cryptography for the safety of data among other features. Citing concerns of security, the RBI concept note states that central bank digital currency ecosystems may be at a similar risk of cyber-attacks that the current payment systems are exposed to. "The cybersecurity considerations need to be taken care of both for the item and the environment. The central bank's digital currency is expected to generate huge sets of data in real-time. “After factoring in the concerns related to anonymity, appropriate analytics of Big Data generated from CBDC can assist in evidence-based policymaking. It may also become a rich data source for service providers for financial product insights”, the concept note stated. Stressing consumer protection, RBI calls it an important pillar of financial stability. The central bank has called for a consumer protection framework that should consider the variations in the digital literacy of the consumers and ways to increase consumer understanding and transparency.
The RBI called for seamless access to digital currency by consumers. It also emphasized an effective and efficient resolution of customer grievances through a robust mechanism.