CBDCs Will Make Cross-Border Transactions Cost-Effective and Fast, Says RBI Deputy Governor

The RBI is planning to introduce its CBDC in stages during the current fiscal year that ends in March.

Written by Shomik Sen Bhattacharjee, Edited by Richa Sharma | Updated: 8 September 2022 13:45 IST

CBDCs Will Make Cross-Border Transactions Cost-Effective and Fast, Says RBI Deputy Governor

Photo Credit: Reuters

The RBI has proposed to launch the Digital Rupee on a pilot basis this year

Highlights

The 'Digital Rupee' project was announced earlier this year
RBI Deputy Governor believes CBDC internationalisation will be beneficial
The RBI has reportedly asked four banks to internally test its CBDC

The Reserve Bank of India's (RBI) Deputy Governor T Rabi Sankar has stated that the country's upcoming Central Bank Digital Currency (CBDC) could be viewed as a tool that greatly reduces time and cost for cross-border transactions. Referring to the RBI's 'Digital Rupee' project, which was announced in the Union Budget by Finance Minister Nirmala Sitharaman earlier this year as a possible solution to the problem, the RBI Deputy Governor remarked that although India has an efficient domestic payments system, cross-border payments remain fairly expensive.

Addressing the India Ideas Summit, an event hosted 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 PTI report, the RBI Deputy Governor spoke 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, he noted.

[Sponsored] Samsung Galaxy S24: The Ultimate Camera Phone With Smarter On-Device AI

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.

"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.

The comments from the Reserve Bank executive arrive on the back of a Moneycontrol report earlier this week that mentioned that the RBI has spoken to four public-sector banks — namely State Bank of India, Punjab National Bank, Union Bank of India, and Bank of Baroda — to run the CBDC pilot internally.

Ethereum Classic Hash Rate Shoots Through the Roof as Merge Nears

It added that the RBI is also reportedly consulting with several 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 been 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.

With the next Apple event due very soon, we dive into all the leaks and rumours surrounding iPhone 14 on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.