The recent fall of the FTX crypto exchange sent shockwaves throughout the financial world. The exchange valued at 32 billion euros declared bankruptcy last month.
Events such as these, as well as the possible fallouts from unregulated crypto markets have had a few governments reaching out with measures to counter the effects of such market upheavals. One of the instruments being launched is the use of digital currency to prevent crypto currencies from undermining global financial stability.
India’s RBI has rolled out a pilot programme of its digital currency this month, made available to individual users. Four domestic banks have been entrusted with carrying out the pilot in select cities only, and the central bank has stated that other banks and cities will be added in due course. Currently The State Bank of India, ICICI, Yes Bank and IDFC will be instrumental in launching this initiative across the cities of Mumbai, New Delhi, Bengaluru and Bhubaneshwar. The programme will stress test the use of this Central Bank Digital Currency (CBDC) in real time retail situations and the value of an e-rupee will be the same as the value of the bank notes and coinage. Digital wallets with the CBDC can be used via QR codes.
The move is hailed as a bold and welcome one and experts say that it will help to reduce the cost of financial transactions, enable transparency within the financial sector and help entrepreneurs with cross-border transactions. It is also hoped that this Programme will reduce overall dependence on physical cash. There is no set date or agenda proposed for a complete national rollout of a sovereign e-currency as the Indian government is keen to proceed cautiously in this matter.
The launch of India’s digital currency coincides with a growing global awareness of the need for such a move as China and the Euro Zone are considering this seriously and Singapore recently launched their own version of a digital currency.