Why in news?

• Reserve Bank of India (RBI) launched a retail sandbox in October 2025 to allow fintech firms to develop and test CBDC solutions.
• The digital rupee is already in use, with about 7 million users as part of ongoing pilots that began in December 2022.
• The digital rupee works like digital cash, stored in secure wallets provided by banks.
• Currently, 15 banks including SBI, ICICI, and HDFC offer e₹ wallets downloadable from app stores.

Key Features and Benefits

• CBDCs are designed to be a digital legal tender, backed by the government, unlike private cryptocurrencies which are decentralized and not government-backed.
• Benefits include faster payments, reduced costs, improved transparency, and financial inclusion by providing a public digital money option.​

Privacy and Security Considerations

• While CBDCs can enhance control over personal data and security, there are concerns about potential privacy risks if data is concentrated centrally, making it a target for cyberattacks.​
• Central banks are actively working on balancing privacy with regulatory needs like preventing money laundering and fraud.

Global Context

• Globally, 114 countries are exploring CBDCs, with 81 central banks actively engaged in development or pilot phases.
• Only a few countries like the Bahamas, Nigeria, Jamaica, and Zimbabwe have fully launched their retail CBDCs by 2025.

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