E₹ offers features of physical cash like trust, safety, and instant settlement finality and is non-interest bearing. So would issuing CBDC to meet user demand interfere with monetary policy operations? Could central banks have difficulty in maintaining a steady monetary policy stance?
Its user-friendly interface and QR code-based payments have made it very popular. It has facilitated digital payments for small businesses and street vendors, leading to greater financial inclusion. The success is visible with more than 12 billion transactions carried out through UPI in December 2023. Various recent enhancements to UPI like ‘Conversational Payments’ backed by an artificial intelligence powered system; offline transactions; and linkage of credit lines to UPI would further enhance its versatility. At the same time ‘UPI One World’ provides foreign nationals visiting India to transact payments through the UPI. The linkage between India’s UPI and Singapore’s PayNow bears testimony to the resilience of UPI as a potential global fast payment system.
The valuation guidelines on available for sale (AFS) category of investment are stringent and follow a conservative approach. The Reserve Bank has taken several other initiatives to promote innovation. It allows live testing of financial products or services within a controlled environment. One of its notable successes is UPI123Pay, which enables offline UPI payments. The Regulatory Sandbox framework has been made interoperable in 2023 across multiple regulators.
Initially, only four banks—State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank—in four cities were allowed to offer e₹-R. The RBI has said that the scope of the pilot would gradually be expanded to include more banks, users, and locations. The RBI’s latest decision is expected to increase e-rupee transactions, and in the near future, more companies could also receive the central bank’s approval to offer e-rupee services.
In case you input the wrong PIN more than 3 times as day, then the transaction on e₹ app will be temporarily blocked. You can recover your wallet by using the same phone number/sim on e₹ (Digital rupee) wallet. Yes, you will receive an SMS for every financial transaction involving e₹. Click here to see the list of merchants who are part of the current pilot program. Digital rupee needs an acceptance infrastructure at merchants and this is being enabled in a phased manner. Nine banks, viz., State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC have been identified for participation in the pilot.
Going forward, the inflation outlook would be considerably influenced by food prices, which remain uncertain. Recurring food price shocks could lead to de-anchoring of inflation expectations and generalisation of price pressures. Monetary policy, amidst these uncertainties, needs to be alert and remain actively disinflationary to steer inflation towards the target rate of 4 per cent on a durable basis. Needless to add that a stable inflation will provide the bedrock to India’s growth ambitions. Recent information on the global macroeconomic front has been somewhat reassuring with inflation gradually descending closer to the target, even as growth has held up better than expected.
The odds of a soft landing have increased and this has enthused the financial markets. Financial conditions have eased, and markets have scaled new highs, raising concerns that they might be running ahead of themselves. Chawla noted that the concept of initiating digital currency is only to complement the existing forms of financial transaction and not replace them. “…the Bahamas and the Caribbean have floated the CBDCs to counter cash disbursement issues owing to their tough geographical terrain. The Swedish Central Bank is exploring the rollout of a digital currency to address the dwindling usage of cash in its economy.
If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle. Vanessa Schmidt is a seasoned writer with a passion for crafting informative and engaging content. The Federal Reserve Bank of New York’s Innovation Center (NYIC) announced a 12-week proof-of-concept pilot program in November 2022. The pilot will build a prototype and test a regulated liability network (RLN) that provides a multi-asset, always-on, programmable infrastructure.
The pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants. The e₹-R would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued. Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones / devices.
