RBI has launched the first pilot for retail digital rupee in eight select cities of the country from December 1, 2022.
It is a blockchain based currency which will exist in the form of digital tokens.
The digital form will be of two types. Retail CBDC (CBDC R) and Wholesale CBDC (CBDC W).
CBDC- Central Bank Digital Currency
Retail CBDCs will likely be available for use by all. Through this, transactions can be done like physical cash, without involving any bank. It will have denominations like physical cash. This will be completely different from UPI, in which money is debited from your bank account.
CBDC is a currency, it will be legal tender guaranteed by RBI.
At the same time, the wholesale CBDC will be used for selected financial institutions. The retail digital currency will be distributed through a two-tier model.
RBI will give digital currency to banks. Its first phase is starting with SBI, ICICI Bank, Yes Bank and IDFC First Bank. Union Bank of India, HDFC, Bank of Baroda and Kotak Mahindra will be included in the next phase.
In the first phase it will start in Delhi, Mumbai, Bengaluru and Bhubaneswar. Then in the next phase other cities will be included gradually.
These banks will distribute digital rupee to the common people. This transaction will be done through the wallet of the participating bank.
Digital form will be stored in the mobile phone.
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