The Reserve Bank of India stated, “The use case for this pilot is settlement of secondary market transactions in government securities.”
India’s Central Bank is set to kick off a pilot wholesale central bank digital currency (CBDC) on November 1.
The Reserve Bank of India (RBI) has stated that it will commence the launch of Digital Rupees for specific use cases. The bank also intends to start a retail version within the month.
The central bank made this known in a tweet.
The RBI named nine banks participating in the Digital Rupee project. They include the 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.
According to a statement by the RBI,
“The use case for this pilot is settlement of secondary market transactions in government securities.”
The RBI believes that adopting the Digital Rupees will improve the efficiency of the inter-bank market. Settlements in central bank money will reduce transaction costs by eliminating the need for settlement guarantee infrastructures or collateral to mitigate settlement risks.
Furthermore, the central bank noted that other wholesale transactions and cross-border payments would be the focus of future pilots based on what is learned from this first pilot.
This move by the RBI comes after central banks in other countries like Iran and Thailand explored the use of CBDCs.
