Overview of India’s E-Rupee Decline
India’s e-rupee, the digital currency, is facing a decline in activity as local banks stopped artificially boosting its metrics. The Reserve Bank of India (RBI) achieved 1 million retail transactions last December through incentivizing users and distributing bank staff salaries with the e-rupee. However, daily transactions have now dropped to about 100,000, pointing to a lack of organic demand for the digital currency.
Impact of Incentives Withdrawal on E-Rupee Transactions
After banks were asked to increase daily transactions to 1 million to test the system’s resilience, the push has now stopped. This cessation raises doubts about the future of the RBI’s digital currency projects as the contrast between inflated metrics and actual usage becomes evident. The Bank for International Settlements (BIS) report indicates a shift towards wholesale CBDC issuance as only 12% of central banks plan retail CBDCs in the mid-term.
Central Banks’ Focus on Wholesale CBDCs
BIS highlights central banks’ interest in wholesale CBDCs to enhance cross-border payments in various economies. The likelihood of wholesale CBDC issuance within the next six years surpasses that for retail, with an expected circulation of nine wholesale CBDCs by the end of the decade. This focus on wholesale CBDCs aligns with the banking sector’s efforts to improve international financial transactions.
