Introduction

The Central Bank Digital Currency (CBDC), commonly referred to as the e-Rupee, is a digital token that represents legal tender. It is issued by the Reserve Bank of India (RBI) in the same denominations as paper currency and coins. The introduction of the e-Rupee is poised to revolutionize the financial landscape, particularly in the realm of cross-border remittances.

Current Challenges in cross-border remittances:

• Costlier
• Inefficiencies
• Fraudulent activities
• Time zone difference
• Multiple intermediaries
• Slow and less transparent

Role of e-Rupee in Addressing these Challenges: The e-Rupee aims to address these challenges by facilitating

swift payment processing, providing greater transparency, reducing settlement time to a few seconds, and creating a more efficient currency management system. It is expected to eliminate intermediaries, thereby reducing the transaction fees attached to cross-border payments.

Expected Benefits:

• Reduced Costs: The e-Rupee is expected to reduce the cost of cross-border remittances by 2-3%, which can translate into significant savings for individuals and businesses engaged in international transactions.
• Transaction Fees: Direct transactions with e-Rupee cut down intermediary costs, saving on fees.
• Efficiency: Faster processing and settlements reduce operational costs.
• Individual Savings: People sending money abroad save 2-3% per transaction.
• Business Benefits: Lower costs enhance profits and global competitiveness for businesses.
• Economic Growth: Savings on remittances can boost spending and investment, aiding the economy.
• Increased Security: With the e-Rupee, the security of transactions is expected to increase, reducing the risk of fraud and unauthorized access.
• Confidentiality: e-Rupee keeps beneficiary details private, enhancing transaction security.
• Contactless: The e-Rupee’s contactless nature reduces the risk of theft and fraud.
• Encrypted Transactions: End-to-end encryption of e-Rupee transactions protects against unauthorized access.

• Pre-stored Value: Vouchers have a pre-blocked amount, ensuring secure and reliable transactions.

3. Lower Currency Volatility: The e-Rupee can lead to lower currency volatility, which is particularly beneficial for countries like India that are looking to make their currency more ‘internationally’ acceptable in trade and remittances.

• Stable Value: Unlike cryptocurrencies, the e-Rupee’s value is stable, backed by the central bank.
• Controlled Supply: The RBI regulates the e-Rupee supply, preventing excessive fluctuation.
• Sovereign Currency: As a government-issued digital currency, the e-Rupee offers trust and liquidity.
• Reduced Counterfeits: With digital tracking, the e-Rupee minimizes the risk of counterfeit currency.

Conclusion

The e-Rupee represents a significant step forward in the digitization of the Indian economy. Its impact on cross-border remittances is expected to be profound, offering a more streamlined, secure, and cost-effective alternative to traditional methods. As the RBI continues to pilot and promote the use of the e-Rupee for international transactions, it is likely that we will see a broader adoption and acceptance of this digital currency in the near future.

Read Further:

• E-Rupee Explained
• Digital money vs Online transactions