India’s central bank, the Reserve Bank of India (RBI), is launching its first digital rupee pilot on Nov. 1. with the participation of nine banks. “Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk,” said the central bank.
RBI’s First CBDC Pilot Starts Nov. 1
India’s central bank, the Reserve Bank of India (RBI), announced Monday that “The first pilot in the digital rupee — wholesale segment (e₹-W) shall commence on November 1, 2022.” The announcement adds:
For the pilot, nine banks were identified, viz. State Bank of India (Bank of Baroda), Union Bank of India (HDFC Bank), ICICI Bank and Kotak Mahindra Bank; Yes Bank, IDFC First Bank and HSBC.
“The use case for this pilot is settlement of secondary market transactions in government securities,” the RBI described. “Use of e₹-W is expected to make the inter-bank market more efficient. Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk.”
The RBI stated that future pilots would focus on wholesale transactions and cross border payments. They will consider the results of the first pilot.
Further details about the central bank are available:
The first pilot in digital rupee — retail segment (e₹-R) is planned for launch within a month in select locations in closed user groups comprising customers and merchants.
The Indian central bank released a report earlier this month that explained various risks and aspects of the central bank’s digital currency (CBDC).
According to the Atlantic Council’s Geoeconomic Centre, 105 countries, representing over 95% of global GDP, are currently exploring a CBDC. In May, the Bank of International Settlements released a report showing that CBDCs are being explored by nine of 10 global central banks. The BIS said: “The emergence of stablecoins and other cryptocurrencies have accelerated the work on CBDCs.”
The U.S. is still undecided on whether it will issue digital currencies for its central banks. Jerome Powell, Chairman of the Federal Reserve said recently that it will be at most two years before a digital currency is issued. Some legislators aren’t convinced that digital dollars are necessary. Federal Reserve Chairman Jerome Powell said recently that it will take at least two years to create a digital currency. Fed Governor Christopher Waller also stated last week that he doesn’t like the Fed issuing digital currencies (CBDC) from central banks.
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