Last update: September 7, 2022 3:31 PM IST
![RBI has issued new guidelines. Check it out here. RBI has issued new guidelines. Check it out here.](https://images.news18.com/ibnlive/uploads/2021/07/1627283897_news18_logo-1200x800.jpg?impolicy=website&width=510&height=356)
RBI has issued new guidelines. Check it out here.
The central bank digital currency (CBDC), which is expected to be launched this year, could be a tool to reduce the time and cost of cross-border transactions, central bank deputy governor T Rabi Sankar said on Wednesday.
New Delhi: Central bank digital currency (CBDC), which is expected to be launched this year, could be a tool to reduce time and cost for cross-border transactions, central bank deputy governor T Rabi Sankar said on Wednesday. The RBI has proposed to launch it on a pilot basis this year, as announced by Finance Minister Nirmala Sitharaman in the budget. In the Union Budget 2022-23, the Finance Minister said that the RBI will launch a digital currency equivalent to the rupee in the current fiscal. “We need to understand that the internationalization of CBDCs is critical to solving the payments challenges that institutions like the G-20 and the Bank for International Settlements (BIS) are currently addressing,” he said at the India Ideas Summit. . Observing that India has a good, affordable and fast domestic payment system, he said the cost of cross-border payments remains high. He pointed out that there is a lot of room for improvement in terms of cost and speed.
He said CBDC is probably the most efficient answer to this. For example, if the Indian CBDC and the US CBDC system can communicate with each other, there is no need to wait for a transaction to complete, he added. “This significantly reduces settlement risk from cross-border transactions, saving time and costs. So CBDC internationalization is something I look forward to,” he said. When it comes to fraud management, Sankar said digital payments need to scale while maintaining system integrity, which inherently means technical stability. “This doesn’t just mean that technical failures in the transaction must be minimized, but that the transaction itself must inspire trust,” he said. “There should not be too many cases of fraud,” he added. “Fraud management is an area we need to focus on even if we need to scale up (digital payments),” he pointed out. Citing the example of Unified Payments Interface (UPI) for non-feature phones, Sankar said the RBI is paying special attention to the fact that digital payment technologies must be inclusive.
“The third, of course, is innovation. I've talked about what the Reserve Bank of India Innovation Hub is doing. But this innovative drive is what we want the industry to grow from,” he said. He said central banks must continue to work hard when it comes to data security. “We must understand that there will never be a moment when we feel safe enough. “Because that’s the moment you become vulnerable,” he added.
Read all the latest business news and breaking news here.