Reserve Bank of India to expand cross-border payments platform with Asia, Middle East partners
Reserve Bank of India to expand cross-border payments platform with Asia, Middle East partners
The Reserve Bank of India (RBI) is advancing its cross-border payments initiative by incorporating central bank digital currencies (CBDCs) as a settlement mechanism. The initiative aims to offer instant settlement capabilities and expand its reach to new trading partners in Asia and the Middle East. Existing agreements with Sri Lanka, Bhutan, and Nepal are set to be bolstered with the addition of the United Arab Emirates (UAE) to the program.
India's CBDC development, which began in 2020 and entered pilot testing in 2022, has seen significant progress. The digital rupee, currently limited to bank-to-bank transactions, amassed approximately 5 million users in its pilot program as of August 2024. RBI Governor Shaktikanta Das emphasized that the country is not rushing to implement a full-scale consumer-facing CBDC but is instead focusing on refining the system.
Interoperability and future expansion
One of the RBI’s key goals is to make CBDCs interoperable across countries by introducing a "plug-and-play" system for seamless transactions. Governor Das highlighted this approach during the Global Conference on Digital Public Infrastructure and Emerging Technologies, noting that enhanced interoperability would improve the efficiency and scalability of sovereign CBDC schemes.
India is also developing offline solutions for the digital rupee to address connectivity challenges in rural areas, demonstrating its commitment to broadening the accessibility and functionality of its CBDC.
Despite the promise of enhanced efficiency and security, India’s CBDC initiative faces criticism from privacy advocates and human rights groups. Critics warn of the risks associated with centrally controlled digital ledgers, including potential government overreach and privacy erosion. These concerns underscore the broader debate surrounding the global adoption of CBDCs, with 134 countries, including all G20 members, currently exploring such technologies.
India’s efforts to integrate CBDCs into its cross-border payment infrastructure position the country as a leader in the evolving digital financial ecosystem. As the initiative progresses, its impact on international trade and domestic financial inclusion will be closely monitored.
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