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First retail pilot
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digital-ruppDefinition of CBDC
According to the Ministry of Finance, “CBDC is a digital or virtual currency but it is not comparable to the private virtual currencies that have mushroomed over the last decade. Private virtual currencies sit at substantial odds to the historical concept of money. They are not commodities or claims on commodities as they have no intrinsic value.”
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Types of CBDCs
The private sector, non-financial customers, and enterprises might all potentially use retail CBDC (e-R), but wholesale CBDC (e-W) is only intended for certain financial institutions.
Retail CBDC is an electronic version of currency primarily intended for retail transactions, as opposed to Wholesale CBDC, which is intended for the settlement of interbank transfers and related wholesale transactions.
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“Considering the features offered by both the forms of CBDCs, a token-based CBDC is viewed as a preferred mode for CBDC-R as it would be closer to physical cash, while an account based CBDC may be considered for CBDC-W,” as per the release by Ministry of Finance.
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Features of CBDC
· Sovereign currency issued by Central Banks
· Liability on the central bank’s balance sheet
· Accepted as a medium of payment, legal tender
· Freely convertible against commercial bank money and cash
· Holders need not have a bank account
· Lowers the cost of issuance of money and transactions
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Banks
· State Bank of India
· Bank of Baroda
· Union Bank of India
· HDFC Bank
· ICICI Bank
· Kotak Mahindra Bank
· Yes Bank
· IDFC First Bank
· HSBC
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Conclusion
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