New Delhi: The Central Bank Digital Currency (CBDC), which will be launched this year, can become a tool to reduce the time and cost of cross-border transactions, Deputy Central Bank Governor T Rabi Sankar said on Wednesday. The Reserve Bank of India has proposed launching it on a trial basis this year, as announced in the budget by Finance Minister Nirmala Sitharaman. In the Union Budget 2022-2023, the Finance Minister said that the Reserve Bank of India will introduce the equivalent of the digital rupee in the current financial year. said in India Top ideas. Noting that India has an excellent, cheap and fast domestic payment system, he said that the cost of paying across borders, however, is still high. He noted that there was significant scope for improvement in terms of cost and speed.
He said that the CBDC would probably be the most effective answer to that, adding, for example, that if the Indian CBDCs and the US CBDCs could talk to each other, we wouldn’t have to wait for transactions to settle. “This significantly reduces settlement risk from cross-border transactions which reduces time and reduces cost. So internationalizing CBDCs is something I am looking forward to.” In terms of fraud management, Sankar said that digital payment needs to be scaled up while maintaining the integrity of the system, which basically means technical stability. He added: “This does not mean that technical failures of transactions should be minimized, it also means that the transactions themselves should inspire trust, and we cannot have too many cases of fraud.” He noted that “fraud management is an area that we also need to focus on if we are to scale (digital payment)”. Citing the example of a Unified Payments Interface (UPI) for non-privileged phones, Sankar said the RBI is paying particular attention to the fact that digital payment technology should be universal.
The third is of course innovation. I’ve talked about it in terms of what the RBI’s Innovation Center is doing. But this innovative drive is something we want the industry to live up to. Regarding data security, he said that the central bank should continue to work on it on an ongoing basis. “We need to understand (that) there is never a moment when we feel safe enough because that is the moment when you become vulnerable,” he added.