December 1, 2023
By Anjali Kochhar
Discussions are underway between the Reserve Bank of India and counterparts like the U.S. Federal Reserve, the Hong Kong Monetary Authority (HKMA), and Swift concerning the possible adoption of a Central Bank Digital Currency (CBDC) for facilitating cross-border payments. According to The Economic Times, insider sources have disclosed the formation of a working group dedicated to exploring this initiative.
India has been transparent about its enthusiasm for cross-border CBDC, evident in the ongoing trials for both retail and wholesale digital rupee. Governor Shaktikanta Das expressed last month that the central bank is increasingly confident in CBDC’s potential as the most effective and efficient means for cross-border payments. A month prior, a treasury official from India echoed similar sentiments, highlighting the potential cost savings associated with this approach.
There is already exchange of digital currency between the UAE and India. India hopes to gain traction for CBDC and prove its worth in jurisdictions without pre-existing direct linkages, even though it has direct cross-border payment connections with the US, UK, Singapore, and the UAE. The largest source of remittances coming into India is the United States, which accounts for about 23 percent of the country’s $111 billion in foreign exchange.
The New York Federal Reserve and Singapore are currently involved in a cross-border CBDC experiment. Because of political opposition, the United States is not seen as a leading adopter of CBDC, despite the fact that concentrating on U.S. remittances could have significant benefits for the people of India.
Despite being the ninth-ranking contributor to India’s inbound remittances, Hong Kong plays a crucial role in the cross-border mBridge CBDC project, which includes the UAE, China, and Thailand. Additionally, Hong Kong is actively engaged in beta testing Swift’s CBDC connector solution. The possibility arises that India aims to join the testing initiative alongside the Hong Kong Monetary Authority (HKMA)
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
