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India’s central bank started a pilot program of its digital currency Tuesday, allowing nine banks to use it for settling secondary-market transactions in government securities.
The e-rupee is set to be test launched within a month for retail use in select locations and users, the Reserve Bank of India had said in a statement Monday.
The limited roll-out comes a day after Singapore’s monetary authority unveiled trials of a digital version of its local dollar. The central banks of China, the euro area, the Bahamas and others have been experimenting in the field, while many others are examining ways to quell the threat to financial stability from private digital currencies.
It “will provide the users the same experience of dealing in currency in digital form, without any risks associated with private cryptocurrencies,” the RBI said earlier in a concept note. Central bank digital currencies, while providing the benefits of virtual currencies, will also ensure consumer protection “by avoiding the damaging social and economic consequences of private virtual currencies.”
Banks that would run the pilot in the initial phase will be State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank Ltd., Kotak Mahindra Bank, Yes Bank, IDFC First Bank. and the Indian unit of HSBC Holdings Plc.
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