The Reserve Bank of India (RBI) is launching a wholesale pilot program involving its Central bank digital currency (CBDC) also called Digital Rupee.

according to a Press release Published by Apex Bank, this first pilot phase focuses on the use of the Digital Rupee for the settlement of secondary market transactions in government securities.

The RBI wants to see if the potential legal tender can reduce some of the backbreaking work being experienced in the interbank market and make it more efficient overall.

“Settlement in central bank money would reduce transaction costs by preempting the need for a settlement guarantee infrastructure or collateral to mitigate settlement risk,” the RBI said in the released statement, laying out the focus for future pilots. stating that “other wholesale transactions and cross-border payments will be the focus of future pilots, based on the learnings from this pilot.”

The motivation to float CBDCs has been a core driver for many Central Banks worldwide. With more than 110 already conducting a form of research on the new form of money. With the evolution of financial technology popularized by the advent of cryptocurrencies, a scenario that saw RBI get ahead of move to ban cryptocurrencies in favor of the digital rupee.

India is listed as one of the countries whose RBI has kept a steady course in the design and development of your Digital Rupee.

The major bank has been engaging with financial institutions and confirmed that this current wholesale pilot will incorporate the participation of nine banks, including but not limited to State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, Yes Bank, IDFC . First Bank and HSBC have been identified to participate in the pilot.

The RBI said the Digital Rupee retail pilot will launch within a month and will see select participation in select locations across the country.

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