Central Bank Digital Currency in India: Perspectives on Design Choices and Implications of e-Rupee

Abstract

Central Bank Digital Currencies are gaining substantial attention globally as central banks explore the design and implementation of digital currencies. This study examines the design considerations of Central Bank Digital Currencies (CBDCs) and their potential impact on India's financial services sector. Employing a mixed-methods approach, we analyse how the e-rupee, India's CBDC, may reshape the country's financial landscape. Through expert interviews (n=22), we identify key design elements of CBDCs and their implications for existing payment systems and banking services. Our findings suggest that while the e-rupee offers unique advantages regarding settlement efficiency and programmability, it faces adoption challenges due to the established dominance of existing digital payment systems. We also explore potential future use cases of CBDCs in India's financial sector and provide policy recommendations for effective CBDC implementation. The study contributes to the emerging literature on CBDCs from a developing economy context.