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Reserve Bank Of India (RBI) recently issued concept note about Central Bank Digital Currency (CBDC) ‘eRupee’ for special case use. This new system will complementary to existing Currency ‘Rupee’ system. Please note ‘eRupee’ will be Digital Currency and not the Cryptocurrency. It will be based on private block chain technology.It will be the fungible token and exchanged with existing ‘Rupee’ on one as to one basis means it will be non-remunerative digital currency. It will not be encrypted.
CBDC will be of two type CBDC-R & CBDC-W depending on their use. Details are as follows:
- CBDC- Retail
This will be Token based. User do not need any account to hold this digital currency. There will no any public history of transactions. All data will be at RBI servers. Access is allowed for retail users.
- CBDC- Wholesale
This will be Account based. User needs a account to hold this digital currency. All accounts to be maintained for transactions of this currency. Access is restricted up to Financial Institutions.
CBDC ‘eRupee’ has many advantages over traditional ‘Rupee”.
Benefits of CBDC
- No Currency Printing cost
- Managed Anonymity
- It has legal Framework
- Centralized Structure
- Cashless Economy
There should not confusion over CBDC and Crypto Currencies. There are some differences mentioned below:
Difference between CBDC & Crypto
| Framework | Central Bank Digital Currency (CBDC) | Crypto Currency |
|---|---|---|
| Nature: | Centralized | Decentralized |
| Transparency: | Data Stored in Private Domain | Data Stored in Public Domain |
| Use: | For Payments | For Investments |
| Technology: | Private Block Chain Technology | Public Block Chain Technology |
| Encryption: | Data is Not Encrypted | Data is Encrypted |
CBDC will be launched on pilot basis in FY 2022-23 itself. This is for special case use. It will be helpful to progress in cashless economy.
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