{"id":210121,"date":"2022-10-11T20:23:49","date_gmt":"2022-10-11T14:53:49","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=210121"},"modified":"2022-10-11T20:23:49","modified_gmt":"2022-10-11T14:53:49","slug":"do-we-really-need-the-e-rupee","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/do-we-really-need-the-e-rupee\/","title":{"rendered":"Do we really need the e-rupee?"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article \u201cDo we really need the e-rupee?\u201d <\/strong>published in The Business Standard <\/strong>on\u00a011th October 2022<\/strong>.<\/p>\n

Syllabus<\/strong>:\u00a0GS3 – Indian Economy and issues relating to planning, mobilization, of resources, growth.<\/p>\n

Relevance<\/strong>: About concerns and benefits of e-rupee<\/p>\n

News<\/strong>: Recently, the Reserve Bank of India (RBI) released a concept note on an Indian central bank digital currency or CBDC.<\/p>\n

About the concept paper on e-rupee<\/h5>\n\n\n\n
Must read: RBI unveils features of digital rupee, plans to launch pilot soon<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What is the state of present monetary and financial systems?<\/h5>\n

The Indian monetary and financial systems are mainly bank-based, with money taking the form of cash and bank deposits. In this system, digital payments were based on virtual money created by commercial banks.<\/p>\n

After the Unified Payments Interface(UPI)<\/a><\/strong>, India became the pioneer in developing digital payment systems. Using the UPI platform, apps like Google Pay, Paytm and PhonePe have popularised digital payments tremendously.<\/p>\n

Recent data indicates that demand for cash may have even gone up once the pandemic started retreating. This seems to indicate that even if a CBDC is introduced as a form of legal tender. It may play a secondary role to cash.<\/p>\n\n\n\n
Must read: UPI and Digital Payments in India \u2013 Explained, pointwise<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What is the need for e-rupee?<\/h5>\n

Along with other reasons, there is a massive push from China to establish the digital yuan, not only as a domestic currency, but also to be used for cross-border payments with their trade and investment partner countries.<\/p>\n

Once the digital yuan gains acceptability as a global currency, it will only be a matter of time before it starts flowing into the Indian economy. This leads not only to the possibility of a dollarisation-type problem in the conventional sense but also grave data security risks. So, it is in India\u2019s interest to limit this possibility by introducing the e-rupee.<\/p>\n\n\n\n
Read more: What are the advantages of having own digital currency for the Indian economy?<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What are the benefits of e-rupee?<\/h5>\n

The e-rupee can make the monetary system more efficient and the financial markets more stable in a number of ways. For instance,<\/p>\n

Monetary system benefits of e-rupee<\/strong>: e-rupee will a)<\/strong> Reduce the cost of physical cash management, b)<\/strong> Push the monetary system towards more digitisation, c)<\/strong> Cash is used significantly in small-value transactions. These transactions may be redirected towards the e-rupee if reasonable anonymity is assured.<\/p>\n

Benefits of e-rupee in financial markets<\/strong>: a)<\/strong> As the e-rupee will provide an alternative to crypto assets, it will provide financial stability in the economy, b) <\/strong>Provide the public with a risk-free virtual currency.<\/p>\n

Benefits of e-rupee on payments infrastructure<\/strong>: As e-rupee 1)<\/strong> Provide the domestic payments system with an additional channel, 2)<\/strong> Increases resilience by providing payment services even outside of the commercial banking system, 3)<\/strong> Diversify the range of payment options, particularly for e-commerce, 4)<\/strong> Helps the international payments infrastructure by making cross-border transactions faster and far less costly, and 5)<\/strong> Ease frictions in cross-border payments that is critical for international trade.<\/p>\n

Increase the welfare for poorer sections through financial inclusion<\/strong>: This is because the e-rupee can a)<\/strong> Make financial services more accessible even to the unbanked and underbanked population, b)<\/strong> Offline functionality as an option will allow the e-rupee to be transacted without the internet. This will enable access in regions with poor or no internet connectivity.<\/p>\n\n\n\n
Read more: Digital Rupee: Advantages and Challenges \u2013 Explained, pointwise<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What needs to be done to increase the benefits of e-rupee?<\/h5>\n

India needs to a)<\/strong> Establish global protocols on the development of cross-border use of CBDCs, b)<\/strong> Create a credible and working CBDC.<\/p>\n\n\n\n
Read more: RBI shouldn\u2019t rush the launch of India\u2019s official digital rupee<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article \u201cDo we really need the e-rupee?\u201d published in The Business Standard on\u00a011th October 2022. Syllabus:\u00a0GS3 – Indian Economy and issues relating to planning, mobilization, of resources, growth. Relevance: About concerns and benefits of e-rupee News: Recently, the Reserve Bank of India (RBI) released a concept note on… Continue reading Do we really need the e-rupee?<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503],"class_list":["post-210121","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1700362392},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/210121","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=210121"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/210121\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=210121"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=210121"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=210121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}