Soon, RBI will begin testing an electronic rupee system that may use tokens or accounts.
According to the central bank, the e-rupee is similar to sovereign paper currency but has a different format, can be exchanged at par with the current money, and will be accepted as a payment method, legal tender, and a secure place to keep value.
The eagerly anticipated e-rupee, or central bank digital currency (CBDC), will shortly start limited trial releases, according to the Reserve Bank of India (RBI), which announced this on Friday. According to the central bank, the e-rupee is similar to sovereign paper currency but has a different format, can be exchanged at par with the current currency, and will be accepted as a payment method, legal tender, and a secure place to keep value. According to an RBI concept note, the digital rupee would show up as a liability on a central bank's balance sheet. According to the central bank, we are currently at the frontline of a pivotal transformation in the history of money that will fundamentally alter what money is and how it works.
The E-rupee can be set up as either "token-based" or "account-based," according to the RBI. A token-based CBDC is a bearer instrument, similar to banknotes, meaning that whoever is in possession of the tokens at any one time would be deemed the owner, according to the statement. In July 2022, 105 nations—representing 95% of the world's GDP—were investigating CBDC. Ten nations have introduced CBDC, with Jamaica's JAM-DEX being the most recent. The first was the Bahamian Sand Dollar in 2020. It stated that an account-based system would necessitate keeping track of all CBDC holders' transactions and balances as well as identifying who owns the money balances.