Today, the Reserve Bank of India will launch the digital rupee for the wholesale market as part of its first pilot test programme to evaluate and enhance the functionality of the currency. Within a month, the central bank would begin a similar test for the retail sector in exclusive user groups comprising consumers and business owners, the RBI said on Monday.
The pilot will examine how secondary market government securities transactions are settled for the wholesale market. The pilot will involve nine institutions, including 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.
“Use of e-W (digital rupee) is anticipated to increase the efficiency of the interbank market. By eliminating the requirement for infrastructure to support settlement guarantee systems or for collateral to decrease settlement risk, settlement in central bank money would lower transaction costs. Based on the lessons learned from this pilot, future pilots would concentrate on other wholesale transactions and cross-border payments, the RBI stated in a press release.
