David - Cryptocurrency Specialist
India’s Reserve Bank is exploring the offline functionality of its in-house central bank digital currency (CBDC), the e-rupi, according to Ajay Kumar Choudhary, Executive Director at the Reserve Bank of India (RBI). Speaking to CNBC-TV18, Choudhary said that the potential of the CBDC for cross-border transactions and linkage with legacy systems of other countries is also being gauged.
Since its launch on November 1, 2022, the wholesale segment pilot for India's digital rupee has made significant progress, with 50,000 users and 5,000 merchants already onboarded for real-world testing. This pilot has facilitated around $134 million in transactions, totalling 800,000 transactions to date. With the launch of the CBDC, India aims to boost financial inclusion and accelerate the country's transition towards a digital economy. By providing a secure and efficient payment system, the digital rupee could potentially benefit millions of unbanked and underbanked individuals in the region, allowing them to access financial services that were previously unavailable to them.
Choudhary also revealed that CBDC would soon become the medium of exchange and needs all features of physical currency, including anonymity. He added that the RBI is eagerly looking forward to private sector and fintech participation in CBDC, especially on offline and cross-border CBDC transactions.
The integration of India’s national payment network, the unified payments interface (UPI), with Singapore's PayNow service on Feb. 21, 2023, enables citizens from both countries to send money across borders quickly. Initially, four major Indian banks, including State Bank of India and ICICI Bank, will facilitate outgoing remittances. Meanwhile, Singapore's DBS Bank and Liquid Group will provide the service to users in the region.
Recent Big Crypto Adoption in India and Possible CBDC impact
The launch of a CBDC by India could potentially have significant implications for the cryptocurrency market, both within the country and globally. While some experts believe that CBDCs could eventually replace cryptocurrencies, others argue that the two can coexist and even complement each other.
One potential impact of a CBDC on the crypto market investment is that it could lead to increased adoption and acceptance of digital assets in general. As more people become familiar with using digital currencies through a CBDC, they may be more likely to explore a variety of cryptocurrencies.
The rising popularity of cryptocurrencies in India is due to the country's young demographic and the lack of financial infrastructure in rural areas. Additionally, India's crypto market saw a surge in trading volumes after the Supreme Court lifted the ban on crypto trading in March 2020. According to a survey by Finder, over 10% of Indians own crypto assets, with trusted Bitcoin being the most popular cryptocurrency.
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