The Reserve Bank of India (RBI) has announced that the first of its pilot launches of a digital rupee will begin Tuesday (Nov. 1) with a “Digital Rupee — Wholesale segment.”
Nine banks will participate in this pilot project and the use case will be the settlement of secondary market transactions in government securities, RBI said in a Monday (Oct. 31) press release.
“The use of [Digital Rupee — Wholesale segment] is expected to make the inter-bank market more efficient,” RBI said in the release. “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.”
This is the first of several planned pilot launches of a digital rupee, according to the release.
Other wholesale transactions and cross-border payments will be the focus of future pilots. In addition, a “Digital Rupee — Retail segment” is to be launched within a month in select locations and among closed groups of customers and merchants, the release stated.
The launch of this pilot program comes about three weeks after RBI announced that it would be doing so and issued a 50-page “concept note” setting out “the planned features of the digital rupee,” including explanations of the “objectives, choices, benefits and risks of issuing a [central bank digital currency (CBDC)].”
As PYMNTS reported at the time, RBI said in the Oct. 7 document that its approach to the issuance of a digital rupee is governed “by two basic considerations — to create a digital rupee that is as close as possible to a paper currency and to manage the process of introducing digital rupee in a seamless manner.”
About a month earlier, on Sept. 6, PYMNTS reported that India’s government has set aggressive timelines to launch a CBDC, while also banning any use of cryptocurrencies in making payments.
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