RBI or the Reserve Bank of India has launched its version of digital currency called RBI E Rupee. It is a virtual currency developed by RBI in response to the most famous but unstable virtual currencies of today’s modern world known as cryptocurrency. RBI and the Indian Government consider cryptocurrency like bitcoin as a dubious form of currency due to its secretive and non-transparent nature and hence in response to it, RBI has launched its digital currency.
What is RBI E Rupee
Reserve Bank of India’s E Rupee is a digital currency that can be used in various transactions by users. It is a token-based digital rupee. By using this currency users can pay or receive currency in digital format using a mobile app. It is currently launched as a pilot project which means it is currently launched in select locations and within a closed user group.
There are two types of RBI Digital Currency also known as the Central Bank Digital Currency (CBDC). They are CBDC-R or Retail and CBDC-W or Wholesale. The CBDC-W was launched in November and the CBDC-R is launched in December which can be used for retail transactions.
RBI Digital Rupee is Different than a Cryptocurrency
RBI E Rupee is different than a cryptocurrency as RBI’s currency is backed by a Nation’s central bank or the Government while any such authority or a sovereign state does not back cryptocurrencies. In this way, it will become evident that the transactions done through the use of RBI currency are traceable but the transactions done via cryptocurrencies are not transparent and they may get hidden from the governmental regulatory agencies.
However, the method of payment and purpose of the transactions remain the same in both the form of currencies.
Are UPI and CBDC/ E Rupee the Same
The question may arise, if we are transacting using UPI daily without any difficulty then what is the use of the E Rupee or how are they different? Therefore, it is pertinent to note that there is a major difference between UPI and RBI E Rupee. The difference is that UPI is a platform on which we do various transactions but RBI’s E Rupee is a currency.
The E Rupee is freely convertible with the Indian Rupee. However, in the case of UPI (Unified Payment Interface), we use a platform to send and receive money from one bank account to the other. In a UPI transaction, a bank always acts as an intermediary.
Benefits of RBI E Rupee or CBDC
As the E Rupee is digital money, the shelf life of digital money is infinite. However, physical money is subject to destruction due to physical constraints. Also, E Rupee is convertible with the physical Indian Rupee, therefore the E Rupee can be stored safely and for an indefinite amount of time by the user if they chose not to spend it.
The Transactions done with the E Rupee are traceable, therefore it will become easy for the Government to keep a track of the movement of money which results in a reduction of illegal and scrupulous transactions that harm a nation.
Challenges for RBI E Rupee
There are certain challenges involved in rolling out the RBI E Rupee among the masses. Some of them are:
- Security Concerns: We live in a very dynamic world in which technology is changing at a rapid rate. So, the E Rupee might face cyber security challenges from several hacks over the digital world.
- Data Protection and Privacy: The central bank must ensure data protection and privacy for the users doing transactions as if it is not provided effectively then the user’s profile and details may get leaked.
- Central Banks of many countries have not yet launched their digital currency despite the fact that they know about it. It also raises concerns about the real-world experience of central bank digital currencies.
However, if the RBI successfully addresses these concerns and rolls out the E Rupee effectively then it will certainly benefit the citizens and the country as a whole.
RBI E Rupee Important Facts
|Name of the Topic||RBI Digital E Rupee (CBDC)|
|Issued By||Reserve Bank of India|
|RBI Digital E Rupee Project||Pilot Project|
|Date of Launch||October 2022|
|RBI E Rupee Type||CBDC-W and CBDC-R,|
where W is for wholesale and R is for Retail
|Other Names||Central Bank Digital Currency or CBDC|
|Official Website of RBI||rbi.org.in|
FAQ on RBI E Rupee
What is Digital Rupee by RBI?
Digital Rupee by RBI is a virtual currency released by RBI that can be used in different transactions among people. It is in response to the cryptos that are the modern world’s fastest-growing digital currencies. RBI and the Indian Government do not encourage the use of cryptocurrency like bitcoin as they are outside the purview of any regulations and monitoring and are done by private handlers.
How is e rupi different from UPI?
E Rupi is different from UPI as E Rupi is a currency, whereas UPI is a Platform that enables digital transactions.
Can Digital Rupee be converted to cash?
Digital Rupee in this case the E Rupi by RBI is convertible to the physical currency i.e. the Indian Rupee.