India’s central bank digital currency (CBDC), the e-rupee, is experiencing a significant decline in activity after local banks ceased efforts to artificially inflate its usage metrics, according to a new report from Reuters.
The Reserve Bank of India (RBI) launched the e-rupee pilot in December 2022 as a digital alternative to physical cash. By December 2023, the initiative had reached its target of 1 million retail transactions per day. However, sources told Reuters that daily transaction numbers have now fallen to about 100,000.
The news agency’s sources reveal that the million-transaction milestone was achieved only after banks were directed to boost transactions by offering incentives to retail users and paying part of their employees’ salaries in e-rupees. The RBI had instructed banks to reach this daily transaction target by the end of 2023 to test the system’s scalability and resilience.
With the end of this artificial boost, Reuters reports that the RBI is not planning an immediate expansion of the pilot program. Instead, according to one source,
“Adoption is expected to grow as more use cases are established.”
The focus has shifted to further testing the technology and developing practical applications for the digital currency.
This report comes amid broader global trends in CBDC development. Earlier in June, the Bank for International Settlements (BIS) revealed that most central banks globally are unlikely to issue retail versions of CBDCs soon, with only 12% of respondents planning to do so.
The BIS survey suggested that the likelihood of launching a wholesale CBDC within the next six years now exceeds that of a retail version. It predicts that up to nine wholesale CBDCs could be in public circulation by the end of the decade.
According to the BIS findings, central banks remain interested in wholesale CBDCs primarily to enhance cross-border payments and to enable financial institutions to access new functionalities made possible by tokenization, such as composability and programmability.
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