RBI Launches Its Own Digital Currency In India

1. RBI Launches Its Own Digital Currency In India As part of India's next-generation financial system, RBI launched the Central Bank Digital Currency of India on November 1, 2022. China, France, the USA, and Switzerland are all striving hard to come up with their own Central Bank Digital Currency as well, since it is not only a big deal for India but also for other developed economies around the world. Digital Rupees will be launched by the RBI in 2022 primarily for settlement of government securities secondary market transactions, but a retail version will also be launched shortly. Currently, only select banks can use e-currency in India for select transactions. Union Bank of India, Bank of Baroda, State Bank of India, ICICI Bank, HDFC Bank, IDFC, Kotak Mahindra Bank, Yes Bank, and HSBC are among the nine banks that can participate in the pilot project of wholesale digital currency. However, the main question is What is Digital Rupee?

2. What is Digital Rupee/Currency? New currency launched by rbi 2022 is a digital representation of currency notes issued by the central bank. A bank account is a physical currency. Money is printed by RBI in physical form to keep the economy running. However, RBI's Central Bank Digital Currency (E-Rupee) will be the equivalent of current physical money. In simple words, RBI’s digital currency is the same as cash but in a virtual form.  There will be one-to-one exchangeable value between the digital rupee and physical currency of the same amount, and it will be accepted as legal tender by all citizens and government agencies. In addition, it will save the operational costs associated with printing cash and the hassles associated with making cash payments.

3. Why do we need Digital Currency in India? 1). Reduced transaction costs: With the advent of digital currency in India, customers will now be able to pay directly to sellers, reducing transaction costs and enabling real-time account settlements instead of waiting a day or two. 2). Assist in creating a safer financial environment: With the advent of digital currency, the government will be able to have better control over how money leaves and enters the country, allowing them to make better economic and budgetary decisions. 3). Physical Cash Management: According to RBI the cost associated with cash management has been on the rise year by year. In comparison to April 1, 2020, to March 31, 2021, the cumulative cost of cash printing was Rs.4,984.80 crore. Thus, e-currencies will save the public from the wear and tear of physical notes by reducing operating costs such as printing, transportation, and storage.

4. 4). Innovate cross-border payments: By introducing the RBI's digital currency, cross-border payments could become more innovative by making the process of transaction across countries fast and smooth by reducing difficulties associated with time zones, legal requirements, and exchange rates. 5). Financial Inclusion: Through this measure, the Reserve Bank of India will contribute significantly to the financial inclusion process by providing financial services to those without bank accounts or internet connections, since digital currency transactions do not require a bank account or internet connection.