In a recent media interaction, Reserve Bank of India (RBI) Governor Shaktikanta Das, commented on the large scope of cross-border transactions in central bank digital currencies (CBDCs). The governor pinned his hopes on the increasing acceptance of CBDC by countries worldwide.
On Tuesday, Das said there is a perceptible change in the thinking with regard to CBDC as it is being recognized by several countries and has great potential in making cross border payments in a smoother and convenient way. He said:
There is a perceptible change in the thinking with regard to central bank digital currency (CBDC). It’s now recognised by a large number of countries.
During the media briefing at the G20 summit of finance ministers and central governors in Gandhinagar, the central bank governor said that CBDC is an important aspect that needs to be looked at more seriously.
Notably, as a part of Finance Ministers and Central Bank Governors (FMCBG) deliberations, it was recognized that CBDC has great potential in cross border payments in a smoother and easier way. Das added that the International Monetary Fund (IMF) is also working towards micro financial challenges rising out of CBDC which will also be factored in.
Talking of the timeline, Das stated that CBDC is a new concept and it needs a fundamental change in the currency system, in the system of money across the world. Notably, the digital currency is a part of the process and “these things take time.”
Das also used the example of UPI (unified payments interface), which was a relatively new feature but gained significant traction over the years. He said that UPI “was confined to only some banks but nobody imagined that there would be 30 crore transactions per day.” Through this, the governor expressed his hopes that CBDC would pick up like UPI in the coming years.
Governor Das, a strong proponent of CBDC adoption over cryptocurrencies, has often presented his views over the topic. As reported by Todayq News, during a speech in London, he had again emphasized the importance of foreign trade infrastructure for the digital rupee, which was set to reach 1 million users domestically by the beginning of July.
It is worth noting that India has been progressing on the path CBDC development and adoption. In November last year, the RBI had first launched the wholesale digital Rupee pilot followed by the retail pilot in February this year. The pilot which began in 2022 involved four national banks and subsequently expanded to nine more banks.
Simultaneously, the Indian finance minister announced that the pilot program had more than 15.8 million digital Rupees in circulation as of February 28, 2023. Considering the India’s large population and the significant challenges it brings to table including the digital divide, the government has also considered the idea of offline CBDC and the potential challenges to it.
Nonetheless, with the growing fame of CBDCs, India is poised to establish itself as the leader considering its collaborations and efforts. In March, RBI entered an agreement with the Central Bank of the United Arab Emirates to study a CBDC bridge for trade and remittances. The nation is also into discussions with 18 nations to test the cross-border settlements in digital Rupee thus strengthening its economy.
