India’s central bank, the Reserve Bank of India (RBI), will pilot the country’s first digital rupee in the wholesale segment (e₹-W) from Nov. 1 and has identified nine banks for participation in the trial.
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- State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC will participate, the central bank said in a statement on Monday.
- RBI said the use case for this pilot will be settling secondary market transactions in government securities.
- RBI said the use of e₹-W is expected to make the inter-bank market more efficient, as 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.
- Future pilots will focus on other wholesale transactions and cross-border payments.
- The first pilot in digital rupee in the retail segment (e₹-R) is set to start within a month in select locations in closed user groups comprising customers and merchants, RBI said.
- In February, India’s Finance Minister Nirmala Sitharaman tasked the RBI with issuance of a digital rupee based on blockchain, months after the central bank proposed amendments to the Reserve Bank of India Act, 1934, to include digital currencies in the definition of “banknotes.”
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