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India is intensifying its efforts to enhance cross-border mobile payment systems and integrate central bank digital currencies (CBDCs) into its financial ecosystem.
According to a Bloomberg report, Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar announced ongoing collaborations with nations like Sri Lanka, the UAE, Bhutan, and Nepal, aiming to establish seamless cross-border payment platforms.
Despite significant advancements, RBI officials, including Sankar, emphasized a cautious approach, indicating that the Digital Rupee’s wider public rollout will only proceed after thorough impact assessments on banking systems and monetary policies.
The RBI is also actively partnering with ASEAN central banks to create a regional instant payment framework.
“We have one arrangement with Sri Lanka. We are working out with other countries like UAE and some neighboring countries as well,”
These partnerships aim to facilitate instant settlements, improve trade efficiency, and lower remittance costs for millions of Indian expatriates in these regions.
India has already forged payment agreements with Sri Lanka, Bhutan, and Nepal, while discussions with the UAE and other neighboring nations are underway.
The UPI is recognized for its scalability and efficiency and has become a model for instant payment systems globally.
India’s flagship Unified Payment Interface (UPI) is pivotal in these developments.
This vision includes ongoing collaborations with ASEAN central banks and plans to establish an integrated payments network under the framework of Project Nexus, an initiative by the Bank of International Settlements (BIS).
With approximately five million users participating in the pilot, the RBI has focused on testing security protocols and evaluating the currency’s impact on financial stability and monetary policy.
The Digital Rupee pilot, launched in 2022, has garnered attention for its potential to revolutionize cross-border trade and remittances.
Unlike cryptocurrencies, CBDCs are issued and regulated by central banks, ensuring sovereign stability and reducing risks associated with market volatility.
The Digital Rupee’s offline capabilities also cater to rural areas with limited internet access, furthering financial inclusion.
RBI officials view CBDCs as a transformative tool for modernizing financial systems.