CAN THE E-RUPEE WORK?

Last year, India joined a growing list of countries exploring digital versions of their currencies. It is now planning to broaden the scope of its pilot project in the digital rupee.

- M.G. Arun

According to the US-based think-tank Atlantic Council, as many as 130 countries, representing 98 per cent of the global economy, are now exploring digital versions of their currencies, with almost half in advanced development, pilot or launch stages. Where does India stand on its pilot programme and what are the benefits of the digital rupee? A few FAQs:

What is the digital rupee and when was it launched?

The digital rupee (also referred to as e-rupee) is India's version of a central bank digital currency (CBDC).

The Reserve Bank of India (RBI) launched the digital rupee as a pilot project in the wholesale segment on November 1, 2022, for use in the settlement of secondary market transactions in government securities. A secondary market is one where financial instruments like bonds are traded.

The pilot project in the retail segment was launched on December 1 the same year for use within a closeduser group comprising participating customers and merchants.

What is the volume of digital rupees in circulation?

The total value of the digital rupee in circulation stood at Rs 16.4 crore as of March 31, 2023, of which Rs 5.7 crore was in the retail segment. Since it is a pilot project, it is not strictly comparable with the total value of banknotes in circulation, which stood at Rs 33.5 lakh crore, and coins at Rs 30,242 crore.

How does the digital rupee work?