The Reserve Bank of India (RBI) has started testing its retail central bank digital currency (CBDC). “e₹-R would be in the form of a digital token that represents legal tender and in the same denominations that paper currency & coins are currently issued, transactions could be person-to-person (P2P) or person-to-merchants (P2M),” the RBI said. Unlike UPI, payments to retailers can be made using QR codes. Distributing CBDCs would involve using middlemen like banks.
What Sets The e₹-R QR distinct from the UPI QR?
UPI uses bank account balances, whereas CBDCs are stored in a wallet. Due to the on-chain settlement capabilities built into digital currencies, blockchain experts believe a digital rupee running on UPI rails would guarantee zero payment transaction failure. Additionally, because CBDC is programmable, the government will find it simple to verify that the disbursed subsidies indeed reached their intended beneficiaries.