Govt, RBI in talks with S Asian nations for trade

The use of the digital rupee is expected to make the inter-bank market more efficient, as settlement in central bank money will reduce transaction costs by pre-empting the need for settlement guarantee infrastructure

New Delhi: RBI Governor Shaktikanta Das on Friday said the government and the central bank are in discussion with South Asian countries to have crossborder trade in rupee. He also said the central bank digital currency (CBDC) is in trial phase and the RBI is moving very carefully and cautiously on digital rupee launch.

“For UPI, we have already entered into agreements with countries in this region, for example, with Bhutan and other countries like Nepal and we are trying to provide the UPI facility to make crossborder payments much easier in this region... “The other initiative is the RBI, together with the Government of India, have initiated rupee settlement of international trade. We are already in discussion with some of the countries in this region and to facilitate rupee settlement of cross border trade in the South Asian region,” Das said. In his keynote address at an IMF conference here, the Governor also said that the RBI has launched a pilot project of CBDC.

“It’s in a trial phase, we are moving about it very carefully, very cautiously because this is something where the approach has to be very cautious, very careful. If there is cloning or anything which happens, it can be very, very risky... So that could be another area where there can be room for cooperation (between South Asian countries),” Das said. After the successful launch of the pilot for the wholesale segment on November 1, 2022, the Reserve Bank of India (RBI) on December 1, last year, began its retail CBDC pilot project.

The use of the digital rupee is expected to make the inter-bank market more efficient, as settlement in central bank money will reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk, the RBI had said while launching the pilot. Das said with global trade outlook for 2022-23 overcast, greater intraregional trade in the South Asian region can enhance opportunities for growth.

“At the central bank level a key dimension for cooperation has been learning from each other on common goals... Rupee settlement of cross-border trade and CBDC, where the RBI has already started moving forward, can be areas of cooperation.’’