Burning updates,
The country is going to get its first digital currency today. RBI to launch digital rupee pilot project today The Reserve Bank of India will pilot the Central Bank Digital Currency (CBDC-Digital Rupee) from Tuesday, implementing the promises made in the General Budget 2022-23 and the announcement made in September, 2022. Experimentally, the use of digital rupees has been allowed only in wholesale transactions of government securities.
The Reserve Bank has allowed nine public and private banks of the country to participate in this process. If this pilot project is successful then the use of CBDC will be introduced experimentally in many other areas. The use of digital rupees in retail financial transactions is also likely to be allowed within a few months. This was indicated by RBI in its detailed report released on digital rupee.
What will be the effect on the cost of financial transactions?
RBI had constituted a committee on digital currency in the year 2020 itself. Based on the recommendations of this committee, a form has been released in September, 2022, which states that it will bring transparency as well as reduce the cost of financial transactions. Considering its advantages, it will be explored for its use in other areas as well. RBI had also said that there is a need to test its potential by using it experimentally in many areas. By the way, the use of digital currency is being considered in many other countries of the world, although the central banks of many countries have also allowed its use.
These banks have been allowed
Banks that have been allowed to use digital rupees as a pilot project include Union Bank of India, State Bank of India, Bank of Baroda, HDFC Bank, ICICI Bank, Kotak Mahdra Bank, Yes Bank, IDFC, including HSBC.
The central bank has said that the digital rupee pilot project will be run for one month among selected customers and merchants at certain locations. Detailed information related to this will be given later. Based on the learning and experience gained from this, it is possible to expand it. The central bank has also said that the wholesale use of digital rupees will make inter-banking transactions more efficient in the securities market. The cost of the settlement process will be reduced. The Reserve Bank has also informed that the use of digital rupees will also be started in other transactions like wholesale transactions.
What will be the effect on the cost of financial transactions?
RBI had constituted a committee on digital currency in the year 2020 itself. Based on the recommendations of this committee, a form has been released in September, 2022, which states that it will bring transparency as well as reduce the cost of financial transactions. Considering its advantages, it will be explored for its use in other areas as well. RBI had also said that there is a need to test its potential by using it experimentally in many areas. By the way, the use of digital currency is being considered in many other countries of the world, although the central banks of many countries have also allowed its use.