Most probably you have heard about the digital rupee now. Even if you didn’t hear anything then no need to worry. Here, you will learn every single detail about the e-rupee in India.
Recently the Reserve Bank of India introduced digital currency to Indian citizens. But why is it creating so much buzz on the internet? The main reason behind this is that it may revolutionize the financial system of India forever. The pilot of this Central Bank Digital Currency (CBDC) is launched on 1st December 2022.
Nearly every financially powerful nation is pushing for paperless currency. China also launched its digital Yuan. America and France are also pushing digital currency. India is already leading in the journey of digital transactions with the help of UPI (Unified Payments Interface). According to a report from NPCI, UPI transactions created a record of Rs. 11.16 trillion in September.
But let’s now talk about what’s the difference between physical currency and digital currency. Like when you pay someone 100Rs then actually you pay them a note of 100 Rs that is certified by the governor of RBI for the transaction and a promise by the RBI Governor to pay 100 Rs to the bearer of the note. The digital rupee will be the same. It will also be certified by the RBI but just that it will have no physical existence.
You may be thinking that what is mentioned in the previous lines is similar to Online transactions or UPI payments then why a new digital currency? You’re thinking it right because from the consumer end it’s similar. Now thinking from the banking end, when you pay someone using UPI then you receive a notification of that amount of money debited from your account and the receiver gets the same message of the same amount of money getting credited. But no money is transferred from your bank account to the other person. Banks do these transactions after a decided interval by themselves. Banks don’t transfer these small amounts among each other every day. With the introduction of the digital rupee, the system will change and the money will be transferred at the same moment during online transactions.
With the boom of cryptocurrency, the government got tense that cryptocurrency will replace our fiat currency. Like it’s very very scary for the government that a country’s huge amount of transactions are happening using a currency controlled by some anonymous person.
Both the RBI-issued digital currency and cryptocurrencies are run by the technology of blockchain. Blockchains are highly secured and no one can hack or edit anything in the blockchains. But the crypto market is highly volatile and world leaders didn’t want all the money of a nation to get into that. One more problem with cryptocurrencies is that they are controlled by public blockchain technology. In the digital rupee only you, the receiver of the money, and RBI will have the data but in the case of crypto, anyone can access that data. This is one of the biggest reasons behind these crypto scams we hear about.
The current government has pushed for a cashless economy from the first day. But to date, the effect is not so visible. Even if UPI transaction volume has increased but cash transactions have also increased. The main reason behind the government’s push for a cashless economy is that – managing cash is very difficult for banks and also us. Moreover, when transactions happen in digital currency, the government will have a date for every transaction and that will reduce scams and corruption in the country. Digital currency will also boost cross-border transactions.
From barter systems to digital transactions we have come a long way. Don’t know whether the digital currency will be a success or not.
But let us know in the comments what you think about the future of e-rupee.