{"id":265033,"date":"2023-10-18T20:16:42","date_gmt":"2023-10-18T14:46:42","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=265033"},"modified":"2023-10-18T20:18:42","modified_gmt":"2023-10-18T14:48:42","slug":"the-e-rupee-is-like-wine-itll-take-time-to-mature","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/the-e-rupee-is-like-wine-itll-take-time-to-mature\/","title":{"rendered":"The e-rupee is like wine: It’ll take time to mature"},"content":{"rendered":"\n

Source:<\/strong> The post is based on the article \u201cThe e-rupee is like wine: It’ll take time to mature<\/strong>\u201d published in \u201cLive mint\u201d<\/strong> on 18th October 2023.<\/p>\n

Syllabus:<\/strong> GS3- Economy- currency<\/p>\n

News:<\/strong> The article discusses the slow adoption of India’s Central Bank Digital Currency (CBDC) compared to the popular Unified Payments Interface (UPI). UPI’s ease of use and first-mover advantage make it dominant. However, CBDCs might be better for international transfers. The e-rupee’s full potential isn’t clear yet.<\/p>\n

What is CBDC?<\/strong><\/h2>\n

CBDC stands for Central Bank Digital Currency.<\/p>\n

It’s a digital form of fiat money introduced by RBI.<\/p>\n

Despite RBI’s pilot project involving 3.5 million merchants and 1 million customers, its adoption is slow with 10,000-12,000 daily transactions.<\/p>\n

Unlike UPI, CBDC offers a direct promise-to-pay by RBI, similar to cash.<\/p>\n

What are the issues with RBI’s CBDC?<\/strong><\/h2>\n

Slow Adoption at Retail Level<\/strong>: Despite involvement of 13 participating banks and selection of 3.5 million merchants and 1 million customers, CBDC daily transactions are only 10,000-12,000.<\/p>\n

UPI’s Dominance:<\/strong> The Unified Payments Interface (UPI) already offers ease of transacting, safety, low cost, and functionality on feature phones, making it a popular choice over CBDC for domestic transactions.<\/p>\n

Awareness Issue:<\/strong> One factor contributing to the slow uptake might be the lack of awareness among potential users.<\/p>\n

International Appeal:<\/strong> CBDCs have potential in cross-border financial transfers which are currently costly and can be slow.<\/p>\n

Global Interoperability:<\/strong> For CBDC to be effective internationally, it needs compatibility with other countries’ systems.<\/p>\n

Potential Tracking Concerns:<\/strong> Unlike cash, CBDCs could allow transactions to be centrally tracked, which might raise privacy concerns.<\/p>\n

What is the future potential of CBDC?<\/strong><\/h2>\n

International Advantage:<\/strong> CBDCs could have a distinct edge in cross-border financial transfers, offering potential benefits over the current costly methods.<\/p>\n

Reduced Dependence:<\/strong> Following the Western sanctions on Russia and its removal from Swift, CBDCs highlight an opportunity to reduce dependence on a Western-dominated system.<\/p>\n

Global Interoperability:<\/strong> For CBDCs to be efficient in international settlements, global compatibility is crucial, though achieving it might take time.<\/p>\n

RBI’s Role in Banking:<\/strong> The domestic use case for CBDC highlights its potential as a full-safe RBI promise-to-pay. It could change the banking landscape, with RBI possibly becoming the chief deposit holder.<\/p>\n

Maturation Before Adoption:<\/strong> The advice is to allow the CBDC to mature, using it mainly for foreign payments initially before widening its domestic use.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article \u201cThe e-rupee is like wine: It’ll take time to mature\u201d published in \u201cLive mint\u201d on 18th October 2023. Syllabus: GS3- Economy- currency News: The article discusses the slow adoption of India’s Central Bank Digital Currency (CBDC) compared to the popular Unified Payments Interface (UPI). UPI’s ease of… Continue reading The e-rupee is like wine: It’ll take time to mature<\/span><\/a><\/p>\n","protected":false},"author":10320,"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":[216,8184,10501],"class_list":["post-265033","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-economy","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":{"total":72,"cached_at":1698365089,"cached_date":1698463457},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/265033","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\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=265033"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/265033\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=265033"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=265033"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=265033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}