India launches its digital rupee

The Reserve Bank of India is becoming one of the first central banks to launch a pilot project for the creation of its virtual currency.

The banking regulator comments that the pilot project for a retail version of the digital rupee will be launched in a month.

While there have been a few test cases of CBDC, India is one of the first major economies to launch one for the wholesale sector.

“The objective is to ensure that the operational part is fully functional before delving into other use cases and distributed ledger technology (DLT), which will come at a good time.”

The regulator also said that settlement in central bank money would reduce transaction costs by avoiding the need for settlement collateral or collateral infrastructure to mitigate settlement risks.

“In the future, other wholesale transactions and cross-border payments will be the focus of future pilots, depending on the learnings from this pilot,” the monetary authority said.

The launch of the first pilot in the Digital Rupee-Retail (e-R) segment is scheduled in a month at selected locations in closed user groups comprising customers and merchants.

What is the Digital Rupee?

The Indian state-owned cryptocurrency will be used for transactions in the secondary market for government securities.

The digital rupee can be used from November 1 “in the settlement of transactions in the secondary market for government securities”, i.e. investment products issued by the Indian state, the RBI said in a statement on Monday.

According to the Indian bank’s finance minister, Sitharaman commented that blockchain technology it will give a big boost to the digital economy and lead to a more efficient and cost-effective currency management system.

Is it possible to invest in the digital rupee?

The idea of a cryptocurrency is that it is independent of any third-party institution. So one of the first differences to consider is that the future Indian currency will follow the regulations established by the RBI and its value will be equivalent to that of the real rupee.

At present, several Caribbean countries and Nigeria are the only ones that have officially approved this method of payment, through a virtual version of their currency. Other nations, such as China, have launched pilot projects to evaluate the potential of this practice.

It is because of the above mentioned that this cryptocurrency will function more than as a currency to invest and get a utility, it will function as a Stablecoin and a crypto payment method with service utilities offered by the bank of India.