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RBI Taps Global Counterparts For Efficient Cross-Border Digital Currency Transactions
28 Nov’23 | By Gargi Sarkar
- The central bank is in discussions with its counterparts in the US, Hong Kong and the Society for Worldwide Interbank Financial Telecommunications (SWIFT)
- The Reserve Bank of India’s internal working group is actively exploring optimal technology paths to create a roadmap for direct transactions between two countries
- Recently, RBI Governor Shaktikanta Das spoke about the potential of CBDC as a solution for cross-border transactions
The Reserve Bank of India (RBI) is in discussions with its counterparts in the US, Hong Kong and the Society for Worldwide Interbank Financial Telecommunications (SWIFT) for a fast and cost-effective digital cross-border settlements using central bank digital currencies (CBDC).
The RBI’s internal working group is actively exploring optimal technology paths to create a roadmap for direct transactions between two countries, as per ET report.
Cross-border payments or international payments are financial transactions between a payer and payee located in different countries. The cross-border payments ecosystem includes business-to-business (B2B), business-to-people (B2P), platform-to-business (P2B) and peer-to-peer (P2P) merchants.
Recently, RBI Governor Shaktikanta Das spoke about the potential of CBDC as a solution for cross-border transactions. Das highlighted that as the world increasingly embraces technology, CBDCs can play a crucial role by enabling efficient, cost-effective, and faster payments across jurisdictions.
CBDC, known as the digital rupee (e₹), is a digital token that represents legal tender. The RBI issues Digital Rupee in the same denominations as paper currency and coins and is distributed through banks.
The RBI launched pilots in Digital Rupee in the wholesale segment (e₹-W) on November 1, 2022, and in the retail segment (e₹-R) on December 1, 2022.
Earlier, the Union Ministry of Finance said that Digital Rupee worth INR 130.41 Cr was in circulation as of February 28, 2023.
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As FY23 concluded, RBI revealed its plans to expand the ongoing pilots of CBDC, across both retail and wholesale segments in the financial year 2023-24 (FY24).
Back in March, RBI signed a memorandum of understanding (MoU) with the Central Bank of the United Arab Emirates (CBUAE) to jointly conduct proof-of-concept and pilot(s) of bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade, and enable innovation in the financial products and services segment.
Source: Inc42
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