Wholesale CBDC
Also called: CBDC-W · Topic: Banking, Credit Creation and Monetary Policy · NCERT: Beyond NCERT
Meaning
Wholesale CBDC (e₹-W) is RBI's digital currency that only banks and financial institutions can use. They use it for interbank settlement, meaning they pay what they owe one another. It is legal tender in digital form and a direct liability of RBI. It can make large payments between institutions faster and cheaper, and it reduces settlement risk (the risk that one side fails to pay after a deal is made).
Example
RBI started the wholesale e₹ pilot on 1 November 2022. It was used to settle secondary-market trades in government securities (G-secs), which are deals between banks in bonds that have already been issued.
Don't confuse with
- Retail CBDC (e₹-R): individuals and businesses use it for everyday payments through bank wallets. Its pilot started on 1 December 2022.
Related concepts
- Central bank
- Currency issue monopoly
- Banker to banks
- Lender of last resort
- Bank supervision
- Economic Capital Framework
- Central Bank Digital Currency
- Retail CBDC