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India’s Central Bank Launches Digital Rupee, Plans Phased Rollout

India’s central bank just launched its own version of the digital currency, called the digital rupee, and plans to roll it out over the next year. The Reserve Bank of India (RBI) announced the creation of their digital currency on Wednesday, saying that they have been working on developing it since 2011. Officials say they created their own digital currency in order to make financial services more accessible to citizens who do not have bank accounts and because of advancements in technology that allow them to regulate this new type of currency more effectively than they can standard cash currencies. 

The Problem with Cash 

In a recent push to digitize India’s economy, the country’s central bank has announced plans to issue digital rupees. This is a huge step forward in their efforts to become cashless and reduce corruption. The Indian rupee has had its share of problems in recent years; with so much unaccounted-for cash in circulation, it becomes difficult for the government to collect taxes and track economic activity. However, this is just one of the many advantages that come with digitizing currency: there are no geographical limitations on where someone can spend or send money as long as they have an internet connection. And since it will eliminate the need for printing physical rupees, counterfeiting will also be reduced. 

The Importance of Mobile Banking in India 

Mobile banking is becoming an increasingly popular way to manage your finances. With a mobile phone, you can deposit or withdraw money from any ATM machine in the country. You can also use mobile banking to send money to friends and family members. Mobile banking has been particularly helpful for people in India who do not have bank accounts and are unable to access traditional banks. According to a recent study by Gartner, by 2017 there will be 1 billion internet users in India. Most of these individuals will be using their phones for internet access, which means that this technology will become even more important as time goes on and nearly everyone in India becomes connected online. 

The Case for Faster Payments 

In India, where 90% of the population does not have a bank account and cash is used for 98% of all transactions, there are serious limitations to how quickly payments can be made. This is a huge problem when you consider that every year Indians waste 6.4 billion hours in queues waiting to pay bills or buy food. India has been working on building up its digital infrastructure to try and solve this issue with efforts like demonetization and the introduction of a new national biometric ID system. And now the country has taken its first steps towards phasing out physical money completely. On Thursday, the Reserve Bank of India announced that it would launch a new digital rupee (RUP) by March 2019 with plans to phase out physical currency over time. 

The Problem with the Indian Banking System 

The Indian banking system is one of the most troubled in the world. Less than half of the country’s population has a bank account and about 400 million people have no access to formal financial services at all. This means that many people are forced to use informal lenders such as local moneylenders who charge exorbitant interest rates. The banks themselves are often unwilling to lend to small businesses because they cannot assess their credit risk; microfinance initiatives have been attempted but they often require collateral which poor households don’t have. 

The Solution and Its Benefits 

The Indian central bank announced it will launch a digital rupee with a phased rollout. The transition from physical to digital currency will take place in two phases: first, the central bank will introduce mobile wallets and QR codes for use in person-to-person transactions. Second, the central bank plans to develop an application programming interface (API) that will allow third-party developers to create apps for payments.  

The digital rupee has several benefits over physical cash. First and foremost, it reduces the risk of theft because it is not tangible and cannot be stolen as easily as paper money. Second, it improves transparency because all transactions are visible on the blockchain network and recorded on an immutable ledger. 

The Indian crypto asset market has had a hot and cold relationship. In 2018, the RBI cut crypto startups from its payment network, and this year India implemented a 1% transaction tax on crypto exchanges, resulting in volumes dropping by over 90% since the beginning of the year. 

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