The use case for the pilot is settlement of secondary market transactions in government securities, the RBI said regarding the maiden project starting Tuesday.
"Use of e ₹-W is expected to make the inter-bank market more efficient," it added.
Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk.
Nine banks -- State Bank of India (SBI), Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC -- have been identified for participation in the pilot project.
Going forward, other wholesale transactions and cross-border payments will be the focus of future pilots, based on the learnings from this pilot, the cental bank said.
In a recent concept note on Central Bank Digital Currency, the RBI said CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems.
CBDC is a digital form of currency notes issued by a central bank. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance are specific to each country's unique requirements.
{{/usCountry}}CBDC is a digital form of currency notes issued by a central bank. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance are specific to each country's unique requirements.
{{/usCountry}}The Government of India had announced the launch of the Digital Rupee from fiscal year 2022-23 onwards in the Union Budget tabled in Parliament on February 1, 2022.
Across the globe, more than 60 central banks have expressed interest in CBDCs with a few implementations already under pilot across both retail and wholesale categories and many others are researching, testing, and/or launching their own CBDC framework.