Concept note on Digital Rupee (e-rupee)


    In News 

    • The RBI released a concept note on digital rupee (e-rupee).
      • The Government of India had also announced the launch of a CBDC in its 2022 Union Budget.

    What is e-rupee (digital rupee)?

    • E-rupee or digital rupee is a digital version of the Indian rupee that the RBI is exploring. 
    • E-rupee is akin to sovereign paper currency but takes a different form, exchangeable at par with the existing currency and will be accepted as a medium of payment, legal tender and a safe store of value.
    • It would appear as a liability on a central bank’s balance sheet
    • According to the RBI, e-rupee can be structured as ‘token based’ or ‘account-based’.
      • A token-based CBDC is a bearer instrument like banknotes, meaning whosoever holds the tokens at a given point in time would be presumed to own them
      • In contrast, an account-based system would require maintenance of record of balances and transactions of all holders of the CBDC and indicate the ownership of the monetary balances
    • The RBI has proposed to issue two versions – wholesale for interbank settlement and retail for the public. 
    • Benefits: Transacting in e-rupee can take away the inconvenience of carrying around physical notes and coins. 
      • Apart from this, the RBI has outlined some benefits for the country as a whole, such as financial inclusion, innovation and lowering the costs of cash transactions.