- Several successful bond trades are conducted using the RBI electronic rupee
- Five- and 10-year bonds are among the first to trade
India’s central bank began a pilot program of its digital currency on Tuesday, allowing selected banks to use it to settle secondary market transactions in government securities.
Several bundles of bonds were traded, with data from Clearing Corp. of India Ltd. showing that 7.38% of 2027 debt and 7.26% of 2032 bonds were among the first to change hands using the new currency form. Nine banks are participating in the pilot.
The electronic rupee will be tested for retail use in selected locations within a month, the Reserve Bank of India said on Monday.
The limited launch comes a day after Singapore’s monetary authority revealed evidence of a digital version of its local dollar. Central banks in China, the Eurozone, the Bahamas, and others have been experimenting in the field, while many others are examining ways to quell the threat to financial stability from private digital currencies.
“It will provide users with the same experience of trading currency in digital form, without any risk associated with private cryptocurrencies,” the RBI said earlier in a concept note. Central bank digital currencies, while providing the benefits of virtual currencies, will also ensure consumer protection “by avoiding the harmful social and economic consequences of private virtual currencies.”
The banks participating in the pilot project are the State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank Ltd., Kotak Mahindra Bank, Yes Bank, and IDFC First Bank and the Indian unit of HSBC Holdings Plc.
Source: Bloomberg
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