The Reserve Bank of India’s (RBI) Deputy Governor T Rabi Sankar has said that the country’s upcoming Central Bank Digital Currency (CBDC) could be view as a tool that greatly reduces time and cost for cross-border transactions.
Referring to the RBI’s ‘Digital Rupee’ project, which was announce in the Union Budget by Finance Minister Nirmala Sitharaman earlier this year as a possible solution to the problem, the RBI Deputy Governor remark that although India has an efficient domestic payments system, cross-border payments remain fairly expensive.
Addressing the India Ideas Summit, an event host by the US-India Business Council India (USIBC), T Rabi Shankar said :
“We have to understand that internationalisation of CBDC is crucial to addressing the payments issue that bodies like G-20 and Bank for International Settlements (BIS) are dealing with now.”
As per a report, the RBI Deputy Governor said about India having an excellent, cheap and fast domestic payments system in contrast to a rather expensive cross-border payments system.
There is a lot of scope for improvement in terms of both cost and speed, RBI Deputy Governor said.
CBDC is probably the most efficient solution to this problem, he said, adding, for example, if India’s CBDC and the US CBDC systems can talk to each other, we don’t have to wait for settling transactions.
RBI Deputy Governor Said :
“That massively takes out the settlement risk from cross border transaction that reduces time, that reduces cost. So, CBDC internationalisation is something that I’m looking forward to,” he said.
It added that the RBI is also reportedly consulting with many fintech companies on the Digital Rupee project in a bid to ensure minimal deployment snags.
Among them is the US-based firm Fidelity National Information Services (FIS), which has advising central banks on CBDC issues, such as offline and programmable payments, financial inclusion, and cross-border CBDC payments.
The RBI is planning to introduce India’s CBDC in stages during the current fiscal year that ends in March.
