The Reserve Bank of India wants a central bank digital currency at least partially in place by 2023. With China, one-third of the world could be using them by next year.
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Last week, on Nov. 15, the eight billionth human being was born, according to the UN.
By next year, more than one third of those people may be shopping with a central bank digital currency (CBDC).
Or rather with two: One is China's digital yuan, which has been rolling out for several years. The second is India's digital rupee, which is about to begin a major pilot of its hastily developed CBDC, India's Economic Times reported on Nov. 19.
With a combined 2.8 billion people, China and India both hope to have a fully functioning CBDC at least partially in place by next year. China's essentially there, having been developing the digital yuan, or e-CNY, for eight years and rolling it out for at least two.
India's much newer project is only just beginning, with the Reserve Bank of India (RBI) only issuing a report describing the pros and cons of a CBDC in February 2021.
Moving Fast
But it is pushing ahead rapidly, planning an initial test with as many as 400,000 consumers in no small part to stave off what the government and RBI see as a very real threat from stablecoins to disintermediate its national currency, the rupee.
While the administration of Prime Minister Narendra Modi has been very clear that stablecoin and other cryptocurrencies' use for payments will be forbidden, it has also embraced the digital rupee very strongly.
It has also overruled the RBI's desire to ban cryptocurrencies outright.
Earlier this year, Nischal Shetty, CEO of India's largest cryptocurrency exchange, Wazir X, told the CoinMarketRecap podcast that the digital rupee will be a huge help in raising awareness for the crypto industry.
"Overnight we go from 20 million to 30 million people in India knowing about crypto to maybe 100, 200, 300 million people," he said.
Addition, Not Replacement
While the test of the retail consumer CBDC was announced by the Reserve Bank of India last month, the Economic Times gave rather more detail.
Run by the RBI on a platform hosted by the National Payments Corporation of India, the initial digital rupee test will initially be run by eight banks, with plans to expand it to all banks later in the trial run.
The State Bank of India, Bank of Baroda, Union Bank of India, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Yes Bank and IDFC First Bank will each test the digital rupee with 10,000 to 50,000 customers as well as selected merchants, the Economic Times said.
The digital rupee will be "interoperable with the current payment platforms," a source involved in the test said. "The e-rupee will be stored in a wallet, the denominations will be available as per the customer's request, just like you request cash from an ATM. Banks are launching this only in select cities."
Initially a standalone product, the plan is to integrate it later with existing mobile and web banking services. The RBI has said it plans for the digital rupee to complement rather than replace other forms of payment.
India's push will ramp up pressure on the U.S. to build a digital dollar — a project whose backing by the Treasury Department, Federal Reserve and Congress can be best described as somewhere between ambivalent and cautious.
A growing view that a digital yuan could undercut the dollar's position as the de facto world's reserve currency without a digital dollar to oppose it. That is countered by fierce opposition from banks who fear being cut out of the loop with their depositors.
