The RBI will begin a pilot project on digital rupees tomorrow

The Reserve Bank of India (RBI) announced today that the first trial in the digital rupee-wholesale market will start tomorrow.

According to sources, nine institutions have been shortlisted for participation in the pilot, including State Bank of India (SBI), Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank, and HSBC.

According to the RBI concept note, central bank digital money is a sovereign currency issued by central banks in accordance with monetary policy. It will appear on the central bank's balance sheet as a liability.

"Among other things, the concept note examines critical aspects such as technology and design choices, potential uses of the digital rupee, and issuance methods," the RBI said.

According to the concept note, all individuals, businesses, and government organisations must accept digital money as a method of payment, legal cash, and safe store of value.

The digital currency will be readily exchangeable for commercial bank money and cash. It will be fungible legal money that does not require holders to have a bank account.

"The e-rupee will supplement the already existing forms of currency." It is quite similar to banknotes, but because it is digital, it is likely to be easier, faster, and less expensive. It also has all of the transactional advantages of other types of digital money," the RBI stated in a statement.