Retail CBDC
Also called: CBDC-R · Topic: Banking, Credit Creation and Monetary Policy · NCERT: Beyond NCERT
Meaning
Retail CBDC (e₹-R) is RBI's digital currency for individuals and businesses to use in everyday payments. It is legal tender in digital form. It is a direct liability of RBI, meaning RBI itself owes it to the holder, not a bank. It can be exchanged one-to-one with cash. It is token-based and held in digital wallets offered by banks. It supports payments from one person to another and from a person to a shop. It pays no interest, so that people do not move their savings out of bank deposits.
Example
RBI started the retail e₹ pilot on 1 December 2022. A customer can load e₹ into a bank's wallet app and pay a shopkeeper by scanning a UPI QR code. Offline and programmable features were added later.
Don't confuse with
- Wholesale CBDC (e₹-W): only banks and financial institutions can use it, for settling payments between themselves. The public cannot hold it.
- UPI balance: this is money in a bank deposit, which the bank owes you. It is not a direct claim on RBI.
Related concepts
- Central bank
- Currency issue monopoly
- Banker to banks
- Lender of last resort
- Bank supervision
- Economic Capital Framework
- Central Bank Digital Currency
- Wholesale CBDC