#194 The e₹ is in Town

<p><em>Programming Note</em><strong>: A lighter edition this weekend because </strong><strong>life</strong><strong> </strong><strong>happened</strong><strong> of late-night football, missed flights, and several other things. Also, we will be away for a short year-end break. Normal service will resume on Jan 8, 2023. </strong></p><p><strong>Happy holiday season, everyone!</strong> </p><p><strong>India Policy Watch: </strong>Digital Rupee <strong>(e₹-R) Is In Town</strong></p><p><em>Insights on current policy issues in India </em></p><p><em>— RSJ</em></p><p>The RBI launched the first pilot for the retail digital Rupee this week. It is now among the select list of central banks that’s got a CBDC pilot going. </p><p>The <a target="_blank" href="https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54773">RBI press release </a>covers the plan for the pilot:</p><p>* The pilot would cover select locations in closed user group (CUG) comprising participating customers and merchants. The e₹-R would be in the form of a digital token that represents legal tender. It would be issued in the same denominations that paper currency and coins are currently issued. It would be distributed through intermediaries, i.e., banks. Users will be able to transact with e₹-R through a digital wallet offered by the participating banks and stored on mobile phones / devices. Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations. The e₹-R would offer features of physical cash like trust, safety and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks.</p><p>* The pilot will test the robustness of the entire process of digital rupee creation, distribution and retail usage in real time. Different features and applications of the e₹-R token and architecture will be tested in future pilots, based on the learnings from this pilot.</p><p>The obvi