The Reserve Bank of India (RBI), which is spearheading the creation and testing of the eRupee CBDC, aims to speed up the time it takes to complete financial settlements. In a recent keynote address at the RBI@91 high-level conference in New Delhi on October 14, RBI Governor Shaktikanta Das pointed out that India is among the few major economies with a 24×7 Real Time Gross Settlement (RTGS) system, poised to develop with advanced technologies.
Talking about the eRupee CBDC, Das said that it is an integral part of the world-class Digital Public Infrastructure (DPI) that has led to the creation of several digital financial products. The development of these protocols, including eRupee, is crucial to facilitate cross-border transactions in a cost-effective and real-time manner, he said. Apart from India, countries including China, Hong Kong, Iran and Brazil are also currently working on their CBDCs.
In light of the ongoing global efforts around CBDCs, the RBI emphasized the need for international cooperation to establish a single functional rulebook. This initiative aims to improve the efficient use of CBDCs for faster cross-border settlement.
“Going forward, harmonization of standards and interoperability would be important for CBDCs for cross-border payments and to overcome serious financial stability issues associated with cryptocurrencies,” Das said.
The RBI governor expressed concern that countries choosing to design their own CBDC systems based on local market conditions could hinder efforts to harmonize global CBDC standards. To address this challenge, Das proposed the development of a plug-and-play system that would allow countries to replicate the Indian experience while preserving their sovereignty. However, he did not elaborate further on this proposal at this time.
Parts of Dasa’s speech surfaced on social media.
Edul Patel, founder and CEO of crypto investment platform Mudrex, appreciates the RBI’s efforts to reduce remittance costs and introduce real-time settlement for currencies like the dollar and euro.
“With so many families dependent on remittances, reducing the time and fees for cross-border payments means more money will reach those who need it faster. Expanding India’s eRupee initiative and linking CBDC with UPI could make global transactions easier and safer,” Patel told Gadgets360.
Patel pointed out that this initiative could position India as a leader in improving the availability of cross-border payments and strengthening international trade relations.
India’s eRupee is in trial phase from December 2022 in peer-to-peer, wholesale and retail ecosystems. Currently, eRupee is being tested for offline features and programming functions – which will make it an essential factor in growing financial inclusion in India.
While the RBI is adopting a technology-centric approach to oversee the progress in the fintech industry, it has strongly urged banks to remain cautious about exposing their operations to new technologies.
“Recent technological advances such as artificial intelligence (AI) and machine learning (ML) have opened up new avenues of business and profit expansion for financial institutions. At the same time, these technologies also pose risks to financial stability,” Das pointed out. He warned that if financial institutions rely heavily on AI, ML and cryptocurrencies, they can amplify systemic risks as failures or disruptions in these systems could have cascading effects.