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India expands cross-border payments with new CBDC plans

India expands cross-border payments with new CBDC plans

GrafaGrafa2024/11/25 06:20
By:Isaac Francis

The Reserve Bank of India (RBI) is advancing its cross-border payments platform by expanding partnerships with countries in Asia and the Middle East.  

Current agreements with Sri Lanka, Bhutan, and Nepal will be joined by the United Arab Emirates (UAE), according to Bloomberg.  

The RBI is exploring central bank digital currencies (CBDCs) as a settlement mechanism within its payment system.  

Although India’s CBDC is currently limited to bank-to-bank transactions, the RBI is considering expanding it to retail consumers in the future.  

No timeline has been announced for such a rollout.  

India’s commitment to CBDCs aligns with a global trend.  

According to the Atlantic Council, 134 countries are actively exploring CBDCs, including all G20 nations.  

India began developing its CBDC in 2020 and launched pilot programs in 2022.  

By August 2024, the digital rupee pilot had reached approximately 5 million users.  

Speaking at the Global Conference on Digital Public Infrastructure, RBI Governor Shaktikanta Das highlighted plans for a “plug-and-play” system to enhance interoperability among sovereign CBDC frameworks.  

“There is no rush to transition the digital rupee pilot program into a standardised, system-wide CBDC,” Das said, emphasising a cautious approach.  

The RBI is also focused on offline solutions to encourage digital rupee use in rural areas with limited internet connectivity.  

This is part of the broader effort to ensure inclusivity in digital finance.  

However, the development of CBDCs has sparked criticism from privacy advocates and human rights groups.  

Concerns include the risks of government-controlled digital ledgers, which some argue could lead to misuse, outweighing potential benefits like improved cost efficiency and financial inclusion.  

India’s expansion of its cross-border payments platform and continued CBDC exploration reflects its role as a leader in digital financial innovation while addressing global challenges in implementation.  

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