Throughout a recent keynote address at the G20 TechSprint Finale 2023 in Mumbai, the Reserve Bank of India’s (RBI) Governor, Shaktikanta Das, accentuated the transformative potential of Central Bank Digital Currencies (CBDCs). The governor revealed optimism for CBDCs’ potential to revolutionize the international payment landscape by mitigating current issues such as high costs, slow speeds, limited access, and insufficient transparency.
India is currently within a testing phase of its own national digital currency, the Digital Rupee. Governor Das asserted that the potential outcomes of optimized cross-border payments would have far-reaching effects, influencing peoples’ lives and economies globally. He even mentioned that numerous central banks worldwide are pondering the incorporation of CBDCs, acknowledging their likely influence on shaping the future of finance.
Furthermore, India is taking a proactive approach; it has initiated CBDC pilots within both wholesale and retail segments. The convenience of this is that it allows for extensive data collection and analysis, which will play a vital role in shaping future policies and strategies.
On another note, Governor Das acknowledged the efficiency of using CBDC, especially in eliminating intermediaries and automating settlement processes. In a broader context, the G20 TechSprint 2023 emphasizes critical issues aimed at enhancing the global financial system. Among these is curbing the risks of illicit finance with innovative Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) technology solutions. These solutions, if effective, may enhance the screening process and reduce risks associated with illicit finance, a problem that significantly drains the global GDP.
Moreover, it is worth noting another problem brought up by the RBI governor is linked with forex and currency settlement technology solutions. The objective, as per the governor, is to incentivize the use of local currencies in cross-border payments, specifically in emerging markets and developing economy (EMDE) currencies. This tactic may offer defense against exchange rate fluctuations and ignite growth of local forex and capital markets.
In closing, the RBI governor fostered an open invitation for innovative solutions and technologies that could contribute to cross-border CBDC platforms. This novel approach could lead to interoperability amongst multi-CBDC platforms or domestic payment systems, thereby reducing operational costs, augmenting efficiency, and ensuring consistency in standards across numerous jurisdictions.
Source: Cryptonews
