According to a recent press release issued by the Reserve Bank of India (RBI), the first pilot in the Digital Rupee’s Wholesale sector (e₹-W) would begin on November 1, 2022.
The settlement of secondary market transactions involving government securities is the use case for this experimental project. It is anticipated that the use of e₹-W would make the inter-bank market more efficient, says RBI.
Settlement in money issued by central banks would cut down on the expenses of doing business by eliminating the need for settlement guarantee infrastructure or for collateral used to limit settlement risk, according to the press release.
Based on the lessons that were learned from this pilot, future pilots will center their attention not just on additional wholesale transactions but also on payments made across international borders.
According to the Reserve Bank of India (RBI), nine different institutions have been selected to take part in the pilot program. These banks are the State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank, and HSBC.
Within the next month, the first pilot in Digital Rupee’s Retail sector (e₹-R) is scheduled to be launched in chosen areas in restricted user groups that will consist of consumers and merchants.
The RBI has said before that the Central Bank Digital Currency (CBDC), also known as the Digital Rupee or e-Rupee, is equivalent to a sovereign money and may be traded for fiat currency at a one-to-one rate. The bank added that:
“It is believed that retail CBDC can provide access to safe money for payment and settlement as it is a direct liability of the central bank. Wholesale CBDC has the potential to transform settlement systems for financial transactions and make them more efficient and secure.”
