RBI's digital currency may be used for facilitating international transactions

8 Sep 2022 , 08:06 AM

According to Reserve Bank Deputy Governor T Rabi Sankar on Wednesday, central bank digital currency (CBDC), which will be introduced this year, might be used to speed up and lower the cost of international transactions.

According to finance minister Nirmala Sitharaman’s Budget announcement, the RBI has recommended beginning operations on a trial basis this year.

The finance minister had stated that the RBI would launch a digital counterpart to the rupee in the current fiscal year in the Union Budget for 2022—2023.

He stated at the India Ideas Summit that “we must comprehend that CBDC’s internationalization is vital to tackling the payments issue that organizations like the G-20 and Bank for International Settlements (BIS) are now working with.”

Although India has a great domestic payments system that is inexpensive and quick, he noted that cross-border transfers are still expensive.

He pointed out that there is a tonne of room for improvement in terms of both price and speed.

The most effective solution, according to him, is CBDC. For instance, if the systems in India and the US can communicate with one another, we won’t have to wait for transactions to settle.

Sankar stated that in order to effectively manage fraud, digital payments must be scaled up while maintaining system integrity, or more specifically, technical stability.

Sankar cited the Unified Payments Interface (UPI) for non-feature phones as an illustration of how important it is for digital payment technologies to be inclusive.

“Of course, an invention comes in third. I’ve discussed it in terms of the work done by the Reserve Bank of India Innovation Hub. However, we would like the industry to embrace this inventive spirit “added he.

He stated that the central bank must continue to work on data security on a regular basis.

He continued, “We need to realize that there is never a time when we feel safe enough because that is the point at which you become susceptible.

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