Reserve Bank of India's digital currency is to be launched today. Finance Minister Nirmala Sitharaman said while presenting the budget for the current financial year (2022-23) that the e-Rupee will strengthen the country's digital economy.
The Reserve Bank of India on Friday indicated that it will soon introduce electronic currency i.e. CBDC (Central Bank Digital Currency) for certain special applications. It is used for both retail and wholesale transactions. Reserve Bank of India (RBI) may use 'blockchain' technology in the digital rupee E-Rupay is said to take the payment system to new heights in the country. Common people and businessmen alike can use digital currency for many types of transactions.
Let's know what digital currency i.e. RBI's e-Rupee is, how it works and what are its benefits.
What is RBI's plan?
CBDC i.e. Central Bank Digital Currency will be a fraud-free virtual currency for financial transactions for people, RBI has said. The RBI has two objectives in this. First is to create the digital rupee and then, to introduce it without any hindrance. The RBI wants the CBDC to create a mode where digital rupees can be transacted offline as well. This will enable more people to use digital rupees.
It is similar to paper currency. It will have the same value as ordinary rupees. A digital currency is an electronic form of currency that circulates externally. It will be accepted at Rs. The CBDC will be shown as a 'Liability' on the Central Reserve Bank's balance sheet.
Why RBI wants to introduce digital currency?
RBI wants to reduce the huge cost of managing money in the country. That is, RBI wants to reduce the cost of printing, circulating, and distributing the notes. The Reserve Bank wants to increase the efficiency of the payment system. It also wants to innovate. With this, a new approach will be adopted in cross-border payment operations.
A digital currency is a virtual currency. There is no risk of fraud. People can use it with full confidence. The digital currency will also work in areas without electricity and mobile network due to its offline feature.
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