The Digital Rupee (e₹) is India’s central bank digital currency (CBDC) issued by the Reserve Bank of India (RBI). It was launched on December 1, 2022, following initial proposals in January 2017. Digital Rupee is using blockchain

distributed–ledger technology. Two pilot programs were initiated: e₹–W for wholesale transactions in government securities from November 1, 2022, and

e₹–R for retail transactions with selected banks from December 1, 2022. The e₹- R functions like physical cash, distributed through banks, and allows Person-to-

Person (P2P) and Person-to-Merchant (P2M) transactions, with no interest earnings. The implementation of the Digital Rupee aims to remove the security

printing cost borne by the general public, businesses, banks, and RBI on physical currency which amounted to ₹49,848,000,000.

Advantages of CBDC

• Cost reduction
• Cross-border payment ease
• Financial inclusion by incorporating informal economy

Challenges

• Privacy risks
• Bank disintermediation
• Technology obsolescence
• Operational

The financial data collected on digital currency transactions will be sensitive in nature, and the government will have to carefully think through the regulatory design. This would require close interaction between the banking and data protection regulators.