- Shaktikanta Das, RBI Governor, emphasized the importance of interoperability between traditional systems and CBDCs.
- India steps in to enhance their cross-border payments by introducing a plug-and-play system.
India is taking significant steps toward enhancing cross-border payment efficiency by proposing a plug-and-play system for Central Bank Digital Currencies (CBDCs).
Shaktikanta Das, Reserve Bank of India (RBI) Governor, emphasized the importance of interoperability in cross-border payments. Recently, Das highlighted that interoperability should be a key design element to maximize efficiency in cross-border transactions. The challenge is that different countries may design their payment systems according to their domestic needs.
To address this, Das suggested the creation of a plug-and-play system that could be easily replicated across borders while still allowing countries to maintain their financial sovereignty.
India is already making progress, aiming to improve interoperability between traditional payment systems and CBDCs. This would mean that the payment systems of one country could connect seamlessly with another country’s CBDC system, reducing delays and costs.
The RBI Governor acknowledged that technical barriers can be overcome by adopting common international standards. However, a robust governance structure will be necessary to ensure the long-term sustainability of such a system.
Das pointed out that, wholesale markets have seen improvements in cross-border payments whereas, the retail sector still faces complexity. Addressing these issues has been a priority for G20 countries and other international standard-setting bodies.
RBI’s Focus on Programmable CBDCs and AI Integration
In addition to improving payment efficiency, the RBI is also focusing on the programmability of CBDCs. By programming CBDCs for specific uses, such as purchasing agricultural inputs, banks could gain greater confidence in lending.
Furthermore, with the rise of artificial intelligence (AI) in financial services, Das urged stakeholders to prioritize data privacy and the explainability of AI models.
While AI offers opportunities to streamline financial processes, institutions need to understand and be accountable for AI-driven decisions, especially in loan sanctioning.
India’s proactive approach to exploring CBDC interoperability and the integration of emerging technologies reflects its commitment to fostering a more efficient, inclusive, and secure global financial system.
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