RBI chief sees CBDC as a game-changer in improving cross-border payments

In a keynote address at the G20 TechSprint Finale, Reserve Bank of India (RBI) Governor Shaktikanta Das emphasised the transformative potential of central bank digital currencies (CBDCs) in addressing the longstanding challenges of high costs and slow processing times associated with cross-border payments.

High costs & slow Speed: A global concern

Governor Das shed light on the persistent issues plaguing cross-border payments, including exorbitant costs, sluggish transaction speeds, limited access, and a lack of transparency. These challenges have hindered the efficiency of international trade and financial inclusion, affecting economies and individuals worldwide.

CBDCs: A solution to cross-border woes

Das asserted that CBDCs could be the game-changer needed to alleviate these challenges. He cited the instant-settlement feature of CBDCs as a key factor that could revolutionise cross-border payments by making them more affordable, faster, and secure. Under India's G20 presidency, the G20 TechSprint focused on "Technology solutions for cross-border payments," signaling the growing importance of CBDCs in the global financial landscape.

Keynote Address by RBI Governor Shri Shaktikanta Das at Grand Finale of the G20 TechSprint 2023 https://t.co/Zh698gLW7v

— ReserveBankOfIndia (@RBI) September 4, 2023

RBI's ongoing initiatives

The RBI has been proactive in exploring the potential of CBDCs. Last year, the central bank initiated two CBDC pilot projects, catering to both retail and wholesale segments. Governor Das revealed that the pilot programs were gradually expanding to involve more banks, cities, individuals, and diverse use cases. He stressed the significance of empirical data generated through these initiatives, suggesting that it would inform future policies and actions related to CBDCs.

Digital payments revolution in India

Governor Das also praised India's Unified Payments Interface (UPI) as a pivotal development that has transformed the nation's digital payment ecosystem. UPI has facilitated over 10 billion transactions per month and has played a crucial role in bringing millions of unbanked individuals into the formal financial system. More than 70 mobile apps and over 50 million merchants now accept UPI payments, demonstrating its widespread adoption and impact on financial inclusion.

In conclusion, Governor Shaktikanta Das emphasised that CBDCs hold immense promise in addressing cross-border payment challenges, with the potential to drive economic growth, international trade, and financial inclusion. As the RBI continues to expand its CBDC pilot programs, it is poised to shape the future of digital finance not only in India but also on the global stage.