e-Rupee or IndiaBit : a Rose by Any Other Name ?
Context :
Extract :
Reserve Bank of India (RBI) on October 7, 2022 released a concept note on the Central Bank Digital Currency (CBDC).
RBI will soon start the pilot launch of the digital rupee for specific use cases.
WHAT IS DIGITAL RUPEE?
The Central Bank Digital Currency (CBDC) can be defined as the legal tender issued by the Reserve Bank of India
Touted as Digital Rupee or e-Rupee, RBI's CBDC is the same as a sovereign currency and is exchangeable one-to-one at par with the fiat currency
FEATURES OF DIGITAL RUPEE
> CBDC is a sovereign currency issued by central bank
> It must be accepted as a medium of payment, legal tender, and a safe store of value by all citizens,
enterprises, and government agencies.
> CBDC is “ freely convertible “ against commercial bank money and cash.
> CBDC is a fungible legal tender for which holders need not have a bank account.
TYPES OF CBDC THAT COULD BE INTRODUCED
The Central Bank Digital Currency can be classified into two types :
Ø General purpose or Retail (CBDC-R)
Retail CBDC can be used by all including the private sector, non-financial consumers, and
businesses.
Ø Wholesale (CBDC-W).
Wholesale CBDC is designed for restricted access to select financial institutions.
WHY IS RBI INTRODUCING CBDC ?
CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems
DIGITAL RUPEE VS CRYPTOCURRENCY
RBI also expressed concern about the popularity of crypto-currency in recent years.
# The proliferation of crypto assets can pose significant risks related to money laundering and financing of
terrorism.
# Further, developing CBDC could provide the public with a risk-free virtual currency that will provide them
with legitimate benefits without the risks of dealing in private virtual currencies.
# It may, therefore, fulfill the demand for secured digital currency besides protecting the public from the
abnormal level of volatility that some of these virtual digital assets experience.
# Thus, safeguarding the trust of the common man in the Indian Rupee vis-à-vis proliferation of crypto
assets
Thank You , Shri Shaktikant Dasji :
For considering some of the suggestions made in the following e-mail. I urge you to also consider the rest :
Ø Crypto : Corruption : Corona : China ……………..[ 17 June 2020 ]
Extract :
Here is a brief ( non-comprehensive ) suggestion for proposed Law :
Ø While banning Private Crypto, introduce IndiaBit ( Govt Virtual Currency )
Ø With some effective date , withdraw all Paper Currency ( forget coins )
Ø Minimum denomination will still be called a RUPEE ( easy to convert from paper to digital )
Ø As of a date , bank balances in everyone’s bank account gets converted to IndiaBits
Ø Set time limit within which people can deposit their paper currency into banks for instant conversion
into IndiaBits
Ø After set date, paper currencies held by anyone ( individual or any legal entity such as a Company ),
loses all value and become illegal for any sell / purchase transaction
Ø All future financial transactions ( sell / buy of any goods or services ) can only be through mobile-
app based DIGITAL transactions
Ø Since all transactions will become DIGITAL , Govt would have full / life-time LOG of each citizen’s “
Sale or Purchase “ [ Who bought What , When , from Whom , at What price , Where etc ] .
Ø Here is why automatic compilation of such CONSUMPTION DATA for the entire economy, will be a
GAME CHANGER : Economic data will help policy
With regards,
Hemen Parekh
hcp@RecruitGuru.com / 09 Oct 2022
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Bursting Bitcoin Bubble ? ……………………………………………….[ 10 Dec 2017 ]
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LIBRA : The coming battle of Currencies ? …………………[ 29 June 2019 ]
LIBRA : Am I the only one worried ? …………………………..[ 05 July 2019 ]
Who is afraid of the Big Bad Wolf ( aka LIBRA ) ?........ [ 07 July 2019 ]
Latest word on LIBRA : though not the last word………….[ 10 July 2019]
Will China Reign Supreme ? …………………………………………..
Elephant Bonds vs Dragon Bonds …………………………………….[ 04 Nov 2019 ]
Time to Un-Block the Blockchain Technology …………………..[ 30 Jan 2020 ]
With a law, India plans lasting ban on cryptos ………………….[ 12 June 2020 ]
Thank You, Smt Sitharamanji ………………………….[ 30 Nov 2021 ]
Crypto Rupee : Elephant in the Room ?........... [ 02 Feb 2022 ]
CBDC : Slow and Steady ………………………………….[ 25 July 2022 ]
Comparing apples to oranges: Indian crypto companies criticise RBI's concept note on CBDCs [ET / 09 Oct 22 ]
Private crypto coins undermine financial stability : RBI note / TOI / 09 Oct 2022
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RBI’s concept paper seeks offline feature in e-rupee / TNN / 08 Oct. 22
Extract :
Reserve Bank of India, in a concept paper on the digital currency said that it is desirable to have an offline feature. This, it said, would enable the central bank digital currency ( CBDC ) to work in paces without a telecom network or even electricity
The Central Bank said, that the offline feature would also help to create DIGITAL FOOTPRINT of the “ Unbanked “ population in the financial system, facilitating easy credit availability
CBDC have the possibility for PROGRAMMING the money by tying the end use. For example, agriculture credit by banks can be programmed to ensure that it is used ONLY at the INPUT STORE outlets
The note added that the CBDC could also be used for real-time cross-border transactions
On the issue of ANONYMITY , the Concept Paper calls for a design that will erase all trails of LOW VALUE transactions
The digital rupee ( e-rupee ) system will further bolster India’s digital economy, make the monetary and payment systems more efficient and contribute to furthering financial inclusion
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