What do you mean by Digital Rupee? In this context, explain the working and progress of India's Central Bank Digital Currency (CBDC).
The Digital Rupee (e₹) is a sovereign digital currency issued by the Reserve Bank of India, a legal tender in electronic form, equivalent in value to physical currency. It is a liability of the RBI, unlike private cryptocurrencies or bank deposits.
Working:
- Issued in two forms: CBDC-Wholesale (e₹-W) for interbank settlement, and CBDC-Retail (e₹-R) for public use.
- Distributed through a two-tier model: RBI issues to banks, which distribute via digital wallets.
- Uses token-based transfer for retail (like cash) and account-based for wholesale.
- Enables offline transactions, programmability, and instant peer-to-peer transfers without intermediaries.
Progress:
- Pilot launched in November 2022 (wholesale) and December 2022 (retail).
- Extended to non-bank Payment System Operators, integrated with UPI via QR-code interoperability.
- Cross-border use explored under Project Nexus with BIS.
CBDC promises reduced cash-handling costs, financial inclusion, and efficient cross-border payments, positioning India among digital-currency pioneers.
Answered By:
Important Questions from GS3
Examine the view that financial inclusion is an integral part of social and economic inclusion in a country like India. Also throw light on the usefulness of the R.B.I.'s Financial Inclusion Index.
Describe the various Technology Missions initiated in Indian agriculture and examine their role in food security.
Explain the factors responsible for inefficiency of agri-produce marketing. How e-commerce helps to reduce inefficiency of agri-produce marketing? Explain.
Explain by giving two examples, how biotechnology has helped the Indian farmers in processing their perishable crops.
Distinguish between a Fast Breeder Reactor (FBR) and a thermal nuclear reactor. In the context of first indigenously developed prototype FBR at Kalpakkam, explain the term 'criticality'. What are its implications for clean energy future of our country?
