Discover the groundbreaking RBI e-rupee, a digital currency initiative by the Reserve Bank of India, as we delve into all the essential details about this innovative financial development. Explore the ins and outs of the RBI e-rupee and its potential impact on the Indian economy in this informative LXME blog.

Are you ready to digitize

The world is undeniably transforming digitally with rapid innovations in new technologies. We are all surrounded by digitalization. By enhancing connectivity, financial inclusion, access to trade, and public services, technology has made our life easy.

The launch of UPI (Unified Payments Interface), has made payments easy just by bringing the process to everyone’s fingertips. In less than a minute, people can send money to the recipient’s bank account using UPI apps linked to their bank accounts. 

This year, on 1st December 2022, the Reserve Bank of India launched the pilot of Central Bank Digital Currency (CBDC) i.e., E-Rupee in the retail segment. So, now you might be wondering why is digital currency launched, as we already have physical currency as a means of exchange.

So, to answer this question, why it launched is, RBI believes that the digital rupee system will “boost India’s digital economy, enhance financial inclusion, and make the monetary and payment systems more efficient.”

What is E-Rupee?

E-rupee is also called Central Bank Digital Currency (CBDC) which is nothing but an electronic form of money that can be used in contactless transactions.

As per RBI, “CBDC is the legal tender issued by a central bank in a digital form. It is the same as a fiat currency (government-issued currency) and is exchangeable one-to-one with the fiat currency. Only its form is different.” 

Types of Central Bank Digital Currency 

  1. Retail CBDC (e₹-R): It would be potentially available for use by all in the retail segment i.e., by the public. (applicable to all of us)
  2. Wholesale CBDC (e₹-W): It would be only available in the wholesale segment i.e. to financial institutions.

Benefits of Central Bank Digital Currency:

Drawbacks of Central Bank Digital Currency:

There are a few drawbacks also which also come up along with benefits:

Difference between UPI and Central Bank Digital Currency

When digital currency was launched many doubts were raised in the minds of people regarding what is difference between UPI and Digital currency so, here it is:

CBDC vs upi

Difference between Cryptocurrency and Central Bank Digital Currency:

CBDC vs Cryptocurrency

So, to sum up, now you might be thinking that now digital currency will replace physical currency, so the answer is NO, digital currency will not replace physical currency, however, will act as an additional payment instrument. 

This digital rupee is not very different from bank notes but being digital it is likely to be easier, faster, and cheaper for wholesalers as well as retailers to transact.


FAQs – Common Questions on Digital Rupee/E-Rupee

What is RBI’s e-rupee initiative?

The RBI e-rupee is a digital currency project launched by the Reserve Bank of India to explore the feasibility of introducing a digital version of the Indian rupee.

How does the RBI e-rupee work?

The RBI e-rupee operates on blockchain technology, allowing for secure and transparent transactions. It aims to offer a digital equivalent of physical currency.

What are the benefits of RBI’s digital rupee?

The digital rupee can enhance financial inclusion, reduce transaction costs, and provide easier access to banking services for the unbanked and underbanked populations.

How will the RBI e-rupee impact the Indian economy?

The e-rupee has the potential to revolutionize India’s financial landscape by increasing efficiency, reducing fraud, and promoting digital payments.

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