The Reserve Bank of India (RBI) has proposed creating an easy-to-use system for cross-border payments to smoother transactions between countries. As countries adopt quicker payment systems and explore central bank digital currencies (CBDCs), there are new opportunities to make international payments more efficient.
At a recent conference, RBI Governor Shaktikanta Das said that the biggest improvements in these initiatives would come from ensuring everything works well together.
However, when trying to achieve harmony and cooperation between countries, a major challenge is that each country might prefer to create its own systems based on its own needs and priorities. India has made some advancements and is now working on creating a user-friendly system to benefit the global community.
Bridging legacy systems with CBDCs
Das highlighted that while traditional payment systems should be able to connect with each other, and Central Bank Digital Currencies (CBDCs) should be able to do the same, it’s also crucial for the legacy systems of one country to work seamlessly with another country’s CBDC.
Integrating systems smoothly may pose challenges and might involve compromises. For example, we can circumvent technical issues by sticking to widely accepted international standards. According to Das, they still need to work out the right governance structure or management plan for long-term success.
Optimizing cross-border transactions
Improving cross-border payments has been a key focus for G20 countries and global standard-setting groups like the Committee on Payments and Market Infrastructures. Das mentioned that many countries are already experimenting with different ideas, both on a bilateral and multilateral level, to enhance the efficiency of these transactions.
India took over the G20 presidency in Dec. 2022, putting digital asset regulation high on its agenda. Specifically, the country’s Department of Economic Affairs is working on an important consultation paper about crypto laws, which should be released in September or October.
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