The CBDC seeks to increase the country’s capacity for international trade with countries without U.S. dollar reserves.
The Reserve Bank of India (RBI) is presently in talks with counterparts from at least 18 other countries on possible possibilities for cross-border payments via its central bank digital currency (CBDC), the “digital rupee.”
The Economic Times published an article on June 27 regarding the ambitious foreign trade objectives the RBI has for India’s CBDC. It mentions multiple public statements given by the RBI Governor, Shaktikanta Das.
Das emphasized the significance of international trade infrastructure in a speech given in London in June. At the time, the digital rupee was expected to have 1 million domestic users by the beginning of July.
However, international payments will also become faster, more smooth, and extremely affordable. That is another area that requires a lot of focus. Other central banks that have established or are introducing CBDCs are continuously in communication with us.
In accordance with the data, banks from 18 countries had opened rupee vostro accounts since July 2022. In a different public appearance, Das discussed India’s readiness to provide the CBDC as a means of payment for buying Indian goods for countries who are constrained on US dollars:
“While there is no shortage of dollars in India, some other markets are unable to import due to a lack of dollars.”
Another rationale for relying heavily on the digital rupee for global commercial dealings is an attempt to safeguard the country’s US dollar reserves:
“India experienced an unexpected external sector crisis during the ‘taper tantrum’ period, and the RBI was forced to entice foreign investment by providing some incentives. We didn’t want to experience that scenario again.
The RBI began testing the wholesale digital rupee in November 2022 and the retail digital rupee in February 2023. In March, it announced a collaboration with the Central Bank of the United Arab Emirates to investigate a CBDC bridge for commerce and remittances.