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Business News/ Economy / Cross-border payments can be made efficient via CBDCs: Das

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Cross-border payments can be made efficient via CBDCs: Das

1 min read 04 Sep 2023, 11:42 PM IST Join us

Gopika Gopakumar

Das advocated the need for technology solutions in forex and liquidity to enable settlement in emerging market currencies.

Reserve Bank of India governor Shaktikanta Das (PTI)

New Delhi: The Reserve Bank of India (RBI) governor Shaktikanta Das on Monday said that cross-border payments can be made more efficient through adoption of digital currencies.

“The empirical data that we are generating would go a long way in shaping the policies and future course of action. With its instant settlement feature, I believe, CBDCs (central bank digital currencies) can play an important role in making cross-border payments cheaper, faster and more secure," he said at the G20 TechSprint 2023.

The RBI had started pilot testing CBDCs last year in both wholesale and retail segments. It is aiming to scale up the number of central bank digital currency (CBDC) transactions to one million per day by the end of 2023. Currently, around 5,000-10,000 transactions are being done per day using retail CBDC.

In his speech, Das also advocated the need for technology solutions in forex and liquidity to enable settlement in emerging market currencies.

“The use of local currencies in cross-border payments can help to shield the EMDEs (emerging market and developing economies) from global shocks, protect against exchange rate fluctuations and encourage the development of local forex and capital markets. Multilateral payment platforms that support multiple currencies would offer a way to promote such local-currency payments," he added.

Das also stressed the need to integrate AML/CFT (anti-money laundering/countering financing of terrorism) technology solutions into multilateral platforms to reduce the risks of illicit finance.

He quoted data from the United Nations Office on Drugs and Crime (UNODC) which pegs global money laundering at 2-5% of global GDP, which is about $800 billion to $2 trillion. Other estimates place this closer to $3 trillion, of which, an estimated $3 billion per annum is successfully intercepted. A very small percentage indeed of 0.1%, he said.

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ABOUT THE AUTHOR

Gopika Gopakumar

Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.