Sharp Decline in India’s Digital Currency Activity
The drop in digital currency transactions in India, based on the e-rupee, follows the decision that banks will no longer be allowed to exaggerate data. In connection to this news, Reuters noted in a recent report that the commercial bank of India (RBI) was successful to reach one of the anticipated goals of 01 million transactions at retail level in December of the previous year. This move was mostly attributable to the local banks offering incentives to retail users and disbursing a portion of bank employees’ salaries using the e-rupee.
Artificially Inflated Metrics
The RBI, through two unidentified sources, spread news that the bank had tried to keep on increasing transactions to at least 1 million a day in the year 2023, target being the stress test of the system’s scalability. However, daily transaction numbers have dropped to nearly 100,000 after incentives were availed and withdrawn, thus, it is apparent that there is a lack of organic demand for the movement of the e-rupee.
Impact on Future CBDC Initiatives
The reduction in e-rupee activity brings into perspective the possibility of the RBI’s e-currency initiatives. The difference between the two sides shows that the incentive approach may lead to a one-time boost of e-rupee without further ongoing incentives.
Global CBDC Landscape
Banks for International Settlements gave out a report in the middle of June, saying that 12% of central banks only plan to issue retail CBDCs in a few years. The probability of having a wholesale CBDC within 6 years outnumbers the retail ones. So there will be 9 wholesale CBDCs in operation by the end of the decade.
Focus on Wholesale CBDCs
A BIS report suggests that the central banks are still enjoying commercial CBDCs as their fundamental target for improving international payments in both developed and up-and-coming countries. The importance of this derives from the ongoing worldwide money transfers, which now emphasize, above all, the transaction’s efficiency and security rather than the retail cryptos buying.
The digitalization of e-rupee project has a bright future as India struggles with the e-rupee while the future of its CBDC efforts looks uncertain, and complicates this situation by showing the problems and problems central banks have in digital currency implementation.
