As an analyst with a background in digital currencies and experience in analyzing the adoption rates of CBDCs, I find the recent developments surrounding India’s e-rupee concerning. The sudden drop in transaction numbers, which can be attributed to the withdrawal of incentives offered by local banks, highlights the importance of organic demand when it comes to the successful implementation of a digital currency.
As a crypto investor, I’ve noticed that the hype surrounding India’s digital currency, or e-rupee, has significantly dwindled following the cessation of artificial inflation by local banks. The once brisk activity within the e-rupee market has taken a nosedive as a result.
The digital currency being developed by India’s central bank seems to be experiencing a decline in progress, falling significantly from the high levels reached at the end of December 2023.
Based on Reuters’ report, which relies on sources privy to the situation, the Reserve Bank of India (RBI) managed to process one million retail transactions in December through artificial manipulation. Local banks reportedly encouraged these transactions by providing incentives to customers and distributing a portion of their employees’ salaries via the e-rupee system.
With the incentives being taken away, the number of daily transactions for the e-rupee has dropped to approximately 100,000. It seems that there’s a noticeable absence of people using it spontaneously.
Reuters’ sources
The reports indicate that the RBI previously urged banks to process a minimum of one million transactions daily by the end of 2023 to assess the system’s capacity under heavy workload. Yet, this mandate has been suspended, leaving uncertainty regarding the progression of the RBI’s digital currency projects in light of the disparity between contrived statistics and genuine user activity.
In mid-June, the Bank for International Settlements (BIS) published a report revealing that just 12% of central banks intend to launch retail central bank digital currencies (CBDCs) in the near future. The survey’s findings suggest that the probability of wholesale CBDCs being released within the next six years is higher than that for retail CBDCs, according to BIS. By the end of this decade, there could potentially be nine wholesale CBDCs in circulation.
Central banks continue to explore the implementation of wholesale central bank digital currencies (CBDCs) based on the international financial institution’s observation, as they aim to improve cross-border payment systems in developed and emerging economies alike.
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2024-06-25 14:55