The central bank governor of India stated that the country’s continual collaboration with CBDCs could be the key to enhancing the affordability and efficiency of cross-border remittances.
India’s Reserve Bank Governor, Shaktikanta Das, has emphasized the potential of Central Bank Digital Currencies (CBDCs) to transform cross-border payments. He detailed the potential for CBDCs to significantly reduce the cost and time associated with international payments during his presentation at the “Central Banking at Crossroads” conference.
Remittances are of paramount importance to India’s economy, as billions of dollars are regularly received from the Indian diaspora. Nevertheless, the process continues to be inefficient and costly, but Governor Das is optimistic that CBDCs have the potential to improve the situation.
He stated, “We are of the opinion that there is a significant opportunity to reduce the cost and time associated with remittances.” He also noted that the current systems are expensive and sluggish, particularly for low-income families that depend on cross-border transfers.
He disclosed that India currently maintains a real-time gross settlement (RTGS) system that facilitates secure and rapid domestic payments on a daily basis. Nevertheless, unlocking new efficiencies in global trade would necessitate the expansion of this infrastructure to resolve transactions in major trade currencies, including the US dollar, euro, and British pound.
Governor Das proposed that this expansion could be accomplished through bilateral and multilateral agreements, which would facilitate more efficient and quick transactions between nations.
He acknowledged that the country’s efforts to establish CBDCs will be the game-changing factor, despite his belief that modernizing the RTGS system could reduce transaction costs for cross-border payments.
India is one of the first large economies to establish both wholesale and retail CBDCs, according to the governor. Das emphasized that the assets are not merely intended to establish a digital version of the rupee; they are a component of a comprehensive pilot project that encompasses a variety of innovative features. These encompass the development of inactive solutions that are specifically designed for marginalized and remote populations in the region, as well as interoperability with the UPI rapid payment system.
He elaborated, “As part of our CBDC pilot, we are conducting an experiment with value-added services.” The objective is to increase the accessibility of financial services and to mitigate the obstacles encountered by individuals residing in rural regions.
Das also addressed the obstacles to the widespread adoption of CBDCs. He emphasized the significance of establishing consistent standards across nations to guarantee that CBDCs are interoperable, thereby facilitating the smoother execution of cross-border transactions.
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