At a high level conference held in New Delhi on October 28, Head of Reserve Bank of India Shaktikanta Das addressed the acute necessity to reduce time and price related to cross-border payments that are crucial for emerging economies like India.
In his keynote, Das, highlighted that “remittances are the starting point for many emerging and developing economies, including India, to explore cross-border peer-to-peer (P2P) payments. We believe there is immense scope to significantly reduce the cost and time for such remittances.”
Exploring the possibilities of using the Real-Time Gross Settlement (RTGS) system for transactions in major trade currencies including the US dollar, Euro, and Pound well: Governor Das.
Source: Twitter He noted that “India is one of the few large economies with a 24×7 RTGS system,” indicating the country’s readiness to enhance its payment infrastructure.
Das said that India and a few other economies have started initiatives to increase the linkage of cross-border fast payment systems, bilaterally as well as multilaterally.
Das also highlighted the prospects of Central Bank Digital Currency (CBDC) in enabling swift and frictionless cross-border payments.
He further mentioned, “The feasibility of expanding RTGS to settle transactions in major trade currencies such as USD, EUR, and GBP can be explored through bilateral or multilateral arrangements.”
The Governor also told CBDCs can program and is compatible with the Unified Payments Interface (UPI) retail fast payment mechanism. He mentioned some of the experiments continuing how to reach people in remote areas and underserved populations, by going offline.
Das said standardization and inter-operability were important from the perspective of CBDCs for cross-border payments to prevent similar situations in headless by private cryptocurrencies, which are subjected least regulatory compliance.
Further, Governor Das brought up the issue of how Artificial Intelligence (AI) can be misused in banking, stating that it may lead to a rise in cyber-attacks and data breaches. He said, “Banks and other financial institutions must put in place adequate risk mitigation measures against all these risks. In the ultimate analysis, banks have to ride on the advantages of AI and Big Tech and not allow the latter to ride on them.”
