E-rupee: A Success Story in the Making

Moving forward from an announcement of the launch of the central bank digital currency (CBDC) in the Union Budget 2022–23, India has launched
e-rupee on a pilot project basis. Since, the CBDC or e-rupee is still a budding project, not much can be written about it with certainty. Although no widely accepted definition of CBDC exists, the International Monetary Fund has given a general insight on what it is. It defines CBDC as “a new form of money, issued digitally by the central bank and intended to serve as legal tender.”

Launching a new product in a market requires general awareness about the product among targeted users. The CBDC is a new product and a bit complicated one at that. People might even confuse e-wallets with CBDC. Although it looks like money in a wallet, the liability rests with the Reserve Bank of India (RBI), not with commercial banks or other entities like e-wallets. In this context, the former has an edge over the latter. One of the many challenges faced by China’s e-yuan is lack of education on the use of digital currency. People in China do not feel any reason to switch to e-yuan. There is also an apprehension that the e-yuan wallet could be used by the government to breach into peoples’ privacy and has a possibility to be used for mass surveillance and state monitoring. It cannot be ruled out in the case of India as well, but the depth may be lesser as compared to China. It can be minimised or brought to zero if the RBI is given autonomy while ensuring accountability.