India’s Central Bank Proposes New System to Simplify Global Payments

The Reserve Bank of India (RBI) has proposed creating a versatile system for international payments to enhance global interoperability.

With the rise of rapid payment systems and experiments in central bank digital currencies (CBDCs), there are new opportunities to make cross-border transactions more efficient.

RBI Governor Shaktikanta Das emphasized the importance of integrating interoperability into these systems for maximum efficiency. He acknowledged that a significant challenge is the tendency of nations to develop systems based on their own needs.

To address this, Das proposed a “plug-and-play” model that would allow for system replication while respecting each country’s sovereignty.

India is already advancing towards developing such a system to support international collaboration. Das also highlighted the need for traditional payment systems and CBDCs from different countries to work seamlessly together.

Despite progress in wholesale payments, Das noted that retail cross-border transactions still face delays and higher costs due to multiple layers of processing. Efforts to improve efficiency in this area remain a priority for G20 countries and global financial institutions.

India, which began its G20 presidency in December 2022, is also working on a major consultation paper on cryptocurrency legislation, expected to be released in the coming months.