India’s digital rupee is making waves internationally, but at home, it faces challenges. The recent launch of cross-border CBDC pilots by the RBI has seen a surge in circulation, but domestic adoption has been struggling. After subsidies were removed, e-rupee usage dropped by a staggering 90%, highlighting the need for sustainable utility-driven growth.
Daily transactions have dwindled to just 100,000, prompting the central bank to seek solutions. The initial success of reaching one million daily retail transactions in December 2023 was largely driven by incentives and salary payouts in digital rupees. However, once these rewards were removed, transaction volumes plummeted, exposing the gap between artificial demand and true adoption.
To address these challenges, the RBI is focusing on international utility for the digital rupee. By building controlled-volume corridors with key partners and expanding into multilateral settlement networks, the central bank aims to make the e-rupee indispensable in cross-border trade. Additionally, private fintech companies like Mintoak are equipping major banks with CBDC infrastructure, paving the way for broader adoption.
On the global stage, the landscape of CBDC adoption varies. In the US, the Anti-CBDC Surveillance State Act aims to restrict the Federal Reserve from issuing digital dollars to consumers, citing concerns over government control. In contrast, China is aggressively integrating the digital yuan into everyday transactions, while Russia faces delays in launching the digital ruble due to infrastructure challenges.
Europe, on the other hand, grapples with power outages that raise questions about the feasibility of a digital euro during emergencies. Despite the enthusiasm for CBDCs worldwide, challenges such as weak infrastructure, technical issues, and low public interest pose significant hurdles to widespread adoption.
In India, the crypto market is poised for growth, with projections reaching $15 billion by 2035. Calls for clearer regulations and lower taxes have emerged to attract traders back to the domestic market. With industry leaders lobbying for friendlier rules, major players like Binance and Coinbase are re-entering India, signaling a potential resurgence in the crypto sector.
Overall, the future of digital currencies, both domestically and globally, hinges on utility-driven adoption, sustainable growth strategies, and regulatory frameworks that balance innovation with oversight. As countries navigate the complexities of CBDC implementation and crypto regulation, collaboration between public and private sectors will be key to fostering a thriving digital economy.