Originally published on: November 24, 2024
The Reserve Bank of India (RBI) is ramping up its cross-border payments platform to enable instant settlements by partnering with new countries in Asia and the Middle East.
According to reports from Bloomberg, India is already collaborating with neighboring countries like Sri Lanka, Bhutan, and Nepal, with plans to include the United Arab Emirates (UAE) in the settlements program. In addition, India is considering using central bank digital currencies (CBDCs) as a primary mechanism for settlements.
While India’s CBDC is currently limited to bank-to-bank transactions and not widely used by the general public, there are discussions about extending its availability to retail consumers. However, a specific timeline for this expansion has not been provided yet.
India has been at the forefront of CBDC development globally, alongside nations like China and Russia. The country initiated exploration of CBDC settlements in 2020, and the RBI began testing CBDC development through pilot programs in 2022.
Recently, RBI Governor Shaktikanta Das mentioned that the bank is working on offline solutions to promote the digital rupee’s usage in rural areas with limited internet connectivity. India reported having approximately 5 million users participating in the digital rupee pilot program. Das emphasized that there is no rush to transition the pilot program into a full-fledged CBDC for the entire Indian population.
During a Global Conference on Digital Public Infrastructure and Emerging Technologies, Das also outlined plans to enhance the interoperability of sovereign CBDC schemes through the adoption of a “plug-and-play” approach. This strategy aims to facilitate seamless and efficient transactions across different systems.
While the development of CBDCs has garnered support from various stakeholders, it has also faced criticism from privacy advocates, human rights activists, and individuals concerned about governmental control over digital assets. Critics argue that the risks associated with centrally controlled digital ledgers outweigh the potential benefits in terms of cost and efficiency.
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