Money & Banking
Reserve Bank of India (RBI) launched Retail Digital Rupee
- RBI released the central bank digital currency (CBDC)- digital rupee or e-rupee – for retail customers and merchants.
- Earlier, RBI launched digital rupee in the wholesale segment to settle secondary market transactions in government securities.
- Initially, four banks will be involved in controlled launch of digital currency namely, SBI, ICICI Bank, Yes Bank, and IDFC First Bank in Mumbai, New Delhi, Bengaluru and Bhubaneswar.
- These banks will issue digital tokens in the same denominations as paper currency, which can be used to make and receive payments.
- This is an Indirect model of CBDC.
About Retail e-rupee
- Retail e-rupee will be an electronic version of cash and primarily meant for retail transactions.
- It will be potentially available for use by all i.e., private sector, non-financial consumers and businesses.
- It will provide access to safe money for payment and settlement, as it will be a direct liability of the central bank.
- CBDC or Digital rupee is a legal tender issued by RBI in digital form.
- It is the same as fiat currency and exchangeable one-to-one with fiat currency.
Model for Issuance and Management of CBDC
- Direct model (Single Tier model) where the central bank is responsible for managing all aspects of the CBDC system viz. issuance, account-keeping and transaction verification.
- Indirect model (Two-Tier model) where central bank and other intermediaries (banks and any other service providers), each play their respective role.