E-RUPI VS UPI

The RBI, India’s central bank, has made the E-Rupee, a central bank digital currency, available to some of its customers.What exactly is E-RUPI? How is it different from UPI?Read through to get the answers.E-Rupee is a type of digital currency that the RBI issues directly to individuals and can be used to transfer funds from one wallet to another even when there is no internet connection.But UPI also does the same. What’s the difference?UPI is just a payment enabler that allows a bank account holder to pay and receive money via the internet from another person who also has a bank account and the UPI ID or UPI address.Well, the key difference between payment through UPI and payment through CBDC is the involvement of banks.While using UPI, the individual requests the bank to transfer money; however, the CBDC channel prevents the bank from playing a role, and the digital cash transfers directly to another in his digital wallet with the apex bank.But UPI is the world’s leading example of a payment interface. It has grown by over 100% in just three years. with thousands of crores in transactions also, 84% of Indians have adopted UPI, which is the fastest adoption rate in the entire globe.Then why do we need a whole different system to transfer the same money?Despite the central bank itself facing problems communicating the advantages, Here is what they mentioned: They say that the cost of printing physical money, storing it, and distributing it can be reduced if CBDC also comes into the picture.Source : Outlook INDIA
Individual restrictions, such as the amount and number of transactions per day, will be lifted by UPI platforms.The need to withdraw cash will lessen.But there are counterarguments that question the need for the E-RUPI.The problem with a centrally planned money system is that it gives the government more control over individual spending because the central bank removes commercial banks from the picture.The money kept in your wallet will yield no interest, just like the cash in your pockets.Former RBI governor Raghuram Rajan, who has played a significant role in the success of UPI, has also expressed his concerns.The problem with a central bank digital currency that is not well designed is that it hoovers up all the data and essentially provides competition to even traditional private sector activity.This simply means that it will disrupt the commercial banking system when interest rates are low.What do you think? Do we need E-RUPI? Comment below.