On May 30, the Reserve Bank of India released its annual report for 2022-2023. The report discusses the expansion of RBI’s digital rupee (e₹) pilot project. It says that Punjab National Bank, Canara Bank, Federal Bank, Axis Bank, and IndusInd Bank and 10 cities namely, Ahmedabad, Chandigarh, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla are in the process of joining the pilot project. The project has already been active in eight banks (State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, and ICICI Bank to name a few) across Mumbai, New Delhi, Bangalore, and Bhubaneswar since December 2022. A quick summary of the digital rupee: The digital rupee is a central bank digital currency (CBDC) issued by the RBI. CBDCs are digital currencies (like cryptocurrencies) except that they are issued by central banks and maintain a stable value. There are two types of CBDCs— wholesale (meant for financial institutions to link banks to hold reserves) and retail CBDCs (these are used in transactions). According to the report, as of March 31, there is ₹10.69 crore wholesale e₹ in circulation and ₹5.70 crore retail e₹ in circulation. On the retail side, a few customers and merchants have been selected to be a part of the Closed User Group (CUG) to try out the digital rupee. Why it matters: The e₹ pilot project is a part of RBI’s digitization efforts, it allows the central bank to bring the benefits of cryptocurrencies like swift transactions and saving…
