The Reserve Bank of India released a concept paper on digital currency on Friday. The Central Bank announced that it would soon begin a pilot programme for e-rupee for particular use cases.
The central bank said the purpose behind issuing the concept note is to create awareness about the central bank digital currency and the planned features of the digital rupee, in a statement.
“It explains the objectives, choices, benefits, and risks of issuing a CBDC in India. The Note also seeks to explain Reserve Bank’s approach towards introduction of the CBDC," the Central Bank said in a release.
RBI further added, "The Reserve Bank will soon commence pilot launches of e₹ for specific use cases. As the extent and scope of such pilot launches expand, RBI will continue to communicate about the specific features and benefits of e₹, from time to time."
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The concept note also covers important issues like technology and design choices, potential applications for the digital rupee, and issuance procedures.
It is expected to reduce the price of issuing money and conducting transactions. The central banks are currently attempting to spread acceptance of a more acceptable electronic form of currency in light of the declining use of paper money.
According to the Reserve Bank, CBDC is broadly defined as digitally issued legal tender from a central bank. Similar to sovereign paper money but in a different format, it can be exchanged at par with current money and will be recognised as a form of payment, legal tender, and a secure place to store value. On the balance sheet of a central bank, CBDCs would show up as liabilities.
