CBDC, or Central Bank Digital Currency, is becoming increasingly popular worldwide. One country that has introduced such an innovation is India. The eRupee, India’s Central Bank Digital Currency, has seen success in its first four months of testing, processing transactions worth 5.7 crore Indian rupees.
The Reserve Bank of India (RBI) initiated retail trials of the eRupee on December 1, 2022, at selected locations across the country. According to official data, since then, the eRupee has taken over a significant value of transactions. In response to Moneycontrol’s query, the RBI confirmed that on March 31, 2023, the eRupee had processed transactions worth 5.7 crore Indian rupees.
CBDC is an electronic form of sovereign currency based on blockchain technology. The use of Central Bank Digital Currency has several advantages. Firstly, replacing cash with digital means of payment would allow for a reduction in the use of traditional paper banknotes. Secondly, all transactions are recorded in a distributed ledger, protecting information from manipulation.
In the case of the eRupee, thirteen banks, including Canara Bank and State Bank of India (SBI), are collaborating with the RBI to conduct tests and ensure their effectiveness. These banks also incentivize users who utilize the eRupee, contributing to the popularity of the digital currency. The RBI has an ambitious goal of achieving one million daily eRupee transactions by the end of 2023.
In the coming months, the RBI plans to introduce new features to the eRupee to provide even greater convenience for users. Currently, many Indian banks allow the use of the eRupee, speeding up its adoption. RBI Governor Shaktikanta Das informed that the eRupee will be equipped with features enabling offline payments for rural areas and programmability for corporate purposes.
The Web3 community in India has also shared their opinions on the eRupee. Nischal Shetty, CEO of WazirX and co-founder of the Pi42 cryptocurrency futures exchange, expressed his interest in the RBI’s CBDC plans. He noted that integrating the eRupee with decentralized blockchain networks can bring forth new use cases and strengthen the Indian rupee in the DeFi (Decentralized Finance) space.
India is one of many countries working towards the introduction of CBDC. Other nations such as the UK, China, Japan, and South Korea are also conducting research and tests to introduce their own Central Bank Digital Currency.
A survey conducted by the CFA Institute indicated that the Asia-Pacific region shows greater openness to CBDC, particularly among younger respondents. One of the key motivations driving CBDC interest in this region is financial inclusion and financial stability. Additionally, the rise and fall in value of private cryptocurrencies have contributed to the growing interest in central bank digital currencies.
CBDC in the form of the eRupee appears to bring benefits to the Indian economy. Further development and adoption of the Central Bank Digital Currency can accelerate the modernization of the payment system and contribute to the growth of the Indian economy. This initiative is also attracting attention from the Web3 community and could be another step towards integrating traditional financial systems with blockchain technology.