On Monday, the Reserve Bank of India (RBI) stated that beginning on November 1, 2022, it would commence test launches of the Digital Rupee. It was announced that beginning on Tuesday, a trial program using the Digital Rupee will be implemented in the Wholesale market.
The Reserve Bank of India (RBI) has long been a vocal opponent of private digital currencies. But in October of last year, it recommended expanding the scope of the paper rupee to encompass digital money.
It was previously revealed by Union Finance Minister Nirmala Sitharaman that the RBI would introduce a CBDC in 2022-23, marking the first formal declaration from the Union government on the introduction of the much-awaited digital currency. The CBDC, which the FM claims would help the digital economy, will be built on blockchain technology.
In Other Words, What Exactly Is CBDC or Digital Rupee?
Central Bank Digital Currency is digital legal money issued by a central bank. To put it simply, it is an electronic representation of the Indian Rupee, a sort of fiat money. Because of this, it may be traded directly for regular cash at a one-to-one rate.
All the benefits associated with digital currency and instantaneous transactions will also apply to CBDC. To start, digital money can never be destroyed by fire or water. Additionally, they are not really disoriented. Therefore, the lifespan of digital cash will be infinite compared to paper currency.
Another major benefit of the Digital Rupee compared to Bitcoin is that it is controlled by a centralized body. It will lessen the potential for extreme price swings.
The Reserve Bank of India is worried that Bitcoin, Ether, and other private cryptocurrencies may be used to launder money, fund terrorism, and avoid paying taxes. It has been speculated that by launching its own CBDC, it can mitigate the advantages and disadvantages of using digital money.