What happened?
The digital rupee in India, known as the e-rupee, saw a significant decline in usage when subsidies were removed, revealing a weak domestic demand. Initially, the Reserve Bank of India (RBI) achieved high transaction volumes through incentives but experienced a 90% drop in usage post-subsidy. This has led the RBI to explore cross-border CBDC pilots as an alternative focus to revitalize interest and utility for the e-rupee.
Who does this affect?
This situation affects multiple stakeholders, including the RBI, which is scrambling to find solutions for increasing e-rupee adoption. It impacts financial institutions and fintechs like Mintoak that are providing the infrastructure for integrating digital currencies. Furthermore, consumers and businesses in India, who initially benefited from incentives, now face reduced utility without those subsidies and incentives.
Why does this matter?
The e-rupee’s struggle highlights significant implications for the CBDC market, as it shows the limitations of relying on subsidies for digital currency adoption. The market impact extends globally, as India’s shift to cross-border pilot programs could streamline international trade settlements and reduce costs if successful. Additionally, private fintech companies stepping up to fill infrastructure gaps could lead to increased competition and innovation in the CBDC landscape.