India's Digital Rupee Debuts With Focus on Cross-Border Payments

The Reserve Bank of India earlier announced the phased launch of the country's first official digital currency, referred to as the e-rupee. By introducing the e-rupee, cash-dependent India joins a select group of countries, like China, who own central bank-backed digital currency.

India on Monday announced that the Central Bank-backed digital rupee (e₹) for the wholesale segment is ready to be launched on November 1.

The Central Bank identified nine other commercial banks, including top lender the State Bank of India (SBI), as participatants in the pilot project.

Starting from Tuesday, the digital rupee will be used to settle secondary market transactions in government securities.

“Going forward, other wholesale transactions, and cross-border payments will be the focus of future pilots, based on the learning from this pilot,” the RBI underlined.

The use of e₹-W is expected to make the inter-bank market more efficient, the RBI hopes, while settlement in Central Bank money is expected to reduce transaction costs.

The bank is also planning to introduce the Central Bank-backed digital currency for retail customers within a month.

The Central Bank Digital Currency provides big promises by ensuring transparency and low cost of operation, among other benefits, and has the potential to expand the existing payment systems to address the needs of a wider category of users, the RBI said earlier this year.