India To Start Pilot of Retail Digital Currency on Dec 1

The Reserve Bank of India's first pilot for a retail e-rupee, its version of the central bank digital currency (CBDC), will be launched on Dec. 1, it said in a statement on Tuesday. From a report: The pilot will cover select locations in a closed user group comprising participating customers and merchants, the central bank said. "It would be issued in the same denominations that paper currency and coins are currently issued," the statement added. "It would be distributed through intermediaries such as banks." The RBI has been running a pilot of the wholesale e-rupee since Nov. 1, with nine banks transacting in government securities using the e-rupee. Users will be able to transact with the e-rupee through a digital wallet offered by participating banks and stored on mobile phones or devices, it said.

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[DarkRookie2]

What can possibly be wrong?

Shortlist:
1. Everything

Denominations?

[chaotixx]

Why does a digital currency need denominations? Will merchants decline your large digital bills because they don't can't make the correct change?

Why a currency?

[Xylantiel]

It seems like we should call these things consumer-facing automated clearing houses (ACH), since that's what they are, rather than "currencies". A currency usually implies that one can hold the currency without having some sort of account, but these "digital currencies" seem to be fundamentally based on debiting and crediting accounts. That's not a currency, that's a clearing house. It also seems a little suspect that India wants to denominate balances in its government-managed ACH in something other than its actual national currency. Why do that? This would be like depositing money in a bank and they don't report your balance in dollars but in bucky-bank-e-coins. That's dumb. Banks used to all have their own individual money, but it turned out that was a BAD SYSTEM and we did something else. When entities ignore well-known economic principles it makes them suspect. (In this case, as I understand it, India has a big corruption problem, so big that all the dark money impacts the functioning of their currency. So the Indian government would derive a big benefit from just wholesale replacing their currency with a new one and then declaring all the dark money invalid. Obviously not everyone benefits equally from such a thing and it is not really directly related to making a consumer-facing automated clearing house.)

USA had multiple currencies until 1971 or so

[davidwr]

Gold and silver certificates, United States Notes, and more.

Although, to be fair, they were pretty much the same as Federal Reserve Notes once redemption for precious metals were ended.

They are still legal tender, but generally far more valuable as collectables.

I'm Perplexed

[tsqr]

I don't understand what the added utility of digital currency is for consumers, compared to using an existing "wallet" such as Google Pay. It sounds like it's just a digital "version" of the standard fiat currency, whatever that means. Right now can go completely cashless if that's what you want, if you stick to merchants that accept Apple Pay or Google Pay or whatever your choice is, and that already seems to be almost universal.

The description says that you can easily convert back and forth between digital and standard currency (at least in India's case), and I'm guessing that banks would most likely waive transaction fees based on some minimum balance just like they do for checking account fees. Right now your bank balance is just bits on some storage medium until you withdraw (convert to) cash. So what does digital currency bring to the table for consumers? For the government, the advantage is the possibility for eventual elimination of untrackable cash transactions, but that isn't the case if as long as you can convert back and forth easily.

And for those yelling about Ponzi schemes -- take a breath and calm down. This isn't some bullshit unregulated, highly speculative crypto nonsense; it's just a different way of issuing standard, government-backed currency. If you think government-backed fiat currency is a Ponzi scheme I can't help you.

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[Gibgezr]

>This isn't some bullshit unregulated, highly speculative crypto nonsense; it's just a different way of issuing standard, government-backed currency.
>If you think government-backed fiat currency is a Ponzi scheme I can't help you.
Exactly! All this is is another form of "Interac". No blockchain needed. Centralised. Trusted authorities. Normal banking stuff.
It's literally a digital bank account...which we have been using for decades now.

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[CaptainLugnuts]

There's so much corruption in India the government is trying anything to be able to trace all the money.