Several Indian news outlets have reported on the lack of interest in the digital rupee.
hindu business “There is no discernible difference fromInternet-based banking that users are already happy with“
Early reports reveal low transaction volumes, forcing banks to keep their administrative burden in cash. Central bank digital currencies (CBDC) are intended to replace cash.
Indian lawmakers push for CBDC
Since April 2018, Indian lawmakers have tried to ban private cryptocurrencies, citing consumer protection and concerns about their use for illegal activities such as money laundering.
The Supreme Court found the ban unconstitutional and overturned the ruling. The legislator responded by imposing a punitive tax of 30% on income earned from trading cryptocurrencies, and an additional 1% withholding tax (TDS). As a result, local exchanges reported a significant drop in trading volume.
Through this story, Reserve Bank of India and Finance Minister Nirmala Sitharaman boosted the digital rupee.
March, Sitalaman He said the digital rupee would be advantageous for settling both international and central bank transactions.
“We believe that central bank-led digital currencies have clear advantages because, in this era, large amounts of payments between countries, large-scale transactions between institutions, and large-scale transactions between national central banks Such transactions are all more efficient with digital currencies.”
Digital Rupee Pilot Program Launched December 1st It was widely covered in local media coverage.
Digital Rupee Can’t Keep Up
Conflict with local media Reuters The digital rupee pilot program has been running for a month, it said. Based on this timeframe, bankers said the project didn’t work out.
The crux of the problem boils down to a digital rupee that offers retail users no advantage over existing internet banking systems.
One bank executive said the digital rupee system works because each transaction must be settled separately. In contrast, the traditional interbank system operated by bulk netting settlement with a clearing house.
“There is no advantage over Internet-based trading, and the lack of netting is actually a major drawback.”
Another executive also said the old system should be kept because of low penetration and low volume. Operating both systems at the same time places an additional burden on the bank.
“At the moment, transaction volumes continue to be low, which makes it more inefficient, which means we also have to manage cash, which requires paperwork and additional effort.”
The report suggests a low appetite for CBDC among Indians. Similar results were recorded following his one-year update on his eNaira CBDC project in Nigeria.
geopolitical analyst Nick Giambruno He said the eNaira “debacle” was emblematic of the distrust people have of the ruling elite.