IMPACT OF RBI CENTRAL BANK DIGITAL CURRENCY (ERUPEE) ON PHYSICAL NOTES IN CIRCULATION IN INDIA

Abstract

This paper examines how the Reserve Bank of India's Central Bank Digital Currency, the Digital Rupee (eRupee), is influencing physical currency in circulation (CIC). Using selected RBI/media-reported data points through May 2025, we contrast the scale of eRupee with CIC, outline mechanisms of substitution, and add international case studies (Bahamas, China, Sweden, Nigeria, Jamaica). We also construct illustrative scenarios (2026-2030) for CIC under different eRupee adoption paths. As of March-May 2025, reported eRupee retail value (~Rs 1,016.5 crore) is orders of magnitude smaller than CIC (~Rs 38.1 lakh crore), suggesting minimal stock displacement so far

This extended paper adds scenario simulations that show how alternative levels of CBDC adoption (0.5%, 2%, and 5% of M3) would impact currency, deposits, reserves, and RBI liquidity requirements in India.

This paper studies how the Reserve Bank of India’s Central Bank Digital Currency (CBDC,

“e-rupee”) affects India’s broad money aggregate M3. As of March 2025, e-rupee outstanding was

• 1,016.5 crore (■0.0102 trillion), while M3 stood at approximately ■261–273 trillion — implying a share of only 0.0039% of M3. Thus, the macroeconomic impact is currently negligible.