RBI, international counterparts discuss CBDCs for cross-border settlements
central bank digital currencies (CBDC), sources close to the development told ET.
An internal Reserve Bank of India (RBI) working group has been exploring the best technology path to develop a roadmap for such direct transactions between two countries. CBDC, or the equivalent of paper money in a digital form, has the potential to be a game-changer, particularly in facilitating cross-border settlements that currently require the Swift platform for routing funds through banks.
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Offering CollegeCourseWebsiteIIM LucknowIIML Executive Programme in FinTech, Banking & Applied Risk ManagementVisitIndian School of BusinessISB Professional Certificate in Product ManagementVisitIIM KozhikodeIIMK Advanced Data Science For ManagersVisit“While the current practice involves settling transactions through traditional banking channels, CBDC could enable direct settlement between parties,” said Mihir Gandhi, Partner and Leader of Payment Transformation, PwC India. “The advantages are substantial, but India will also need to address numerous challenges and proactively mitigate associated risks.”
The developments come at a time when India has set up agreements for real-time cross-border fund transfer systems with countries such as Singapore and the UAE. Over the past year, the RBI has also on multiple occasions highlighted the key role that CBDCs can play in quicker and cheaper cross-border payments.
An email sent to the RBI did not receive a response until publication of this report.
Industry experts also said that instant settlements at a predefined exchange rate will empower companies to manage their fund positions effectively.
The RBI, which had launched wholesale and retail
