RBI plans a plug-and-play system to enhance cross-border payment efficiency globally.
Interoperability between legacy and CBDC systems is key to RBI’s payment strategy.
India’s consultation paper on crypto regulation is expected between September and October.
The Reserve Bank of India (RBI) is spearheading efforts to develop a plug-and-play system for cross-border payments, aimed at enhancing interoperability across various nations. With the rapid rise of fast payment systems and growing exploration of central bank digital currencies (CBDCs), the potential for greater efficiency in cross-border transactions has expanded. During a recent conference, RBI Governor Shaktikanta Das emphasized that interoperability should be a primary design feature in these systems, as it could maximize efficiency gains.
Inaugural Address by Shri @DasShaktikanta Governor, Reserve Bank of India at the RBI@90 Global Conference on “Digital Public Infrastructure and Emerging Technologies”, August 26, 2024, Bengaluruhttps://t.co/ESNQ3un1y5
— ReserveBankOfIndia (@RBI) August 26, 2024
Addressing Interoperability Challenges
Achieving interoperability among countries’ payment systems presents a significant challenge. Countries may be inclined to design systems tailored to their domestic priorities, potentially hindering harmonization efforts. To navigate this issue, Governor Das suggested developing a plug-and-play model that would maintain the sovereignty of individual nations while enabling replicability across borders. This strategy represents India’s ongoing work to implement a system that benefits the global community while respecting national interests.
Interoperability Between Legacy and CBDC Systems
Notably, ensuring interoperability between traditional payment systems and CBDC infrastructures is a crucial component of India’s strategy. Governor Das highlighted that not only should legacy systems be able to connect with one another, but CBDC systems must also establish cross-border connectivity.
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The Governor pointed out that legacy systems in one country should be interoperable with another country’s CBDC infrastructure. However, he acknowledged that this would not be without challenges. Technical barriers may arise, but these can be addressed through common international standards. Das also stressed the need for a solid governance structure to ensure the long-term sustainability of such a system.
Regulation Framework in Development
In a previous development, India was preparing to release a consultation paper regarding its crypto regulatory framework, expected between September and October. The Department of Economic Affairs (DEA) is leading this initiative, gathering input from stakeholders to create a comprehensive regulatory plan. Despite the lack of immediate plans to regulate crypto trading, India has been actively working to address the risks associated with crypto assets. The consultation paper is anticipated to be a key moment in India’s evolving approach to crypto regulation.
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