RBI Proposes Plug-And-Play System For Cross-Border Payments

According to Cointelegraph, the Reserve Bank of India (RBI) has proposed the development of a plug-and-play system to enhance interoperability in cross-border payments. This initiative aims to leverage the advancements in fast payment systems and central bank digital currencies (CBDCs) to improve efficiency in international transactions. RBI Governor Shaktikanta Das emphasized the importance of interoperability as a key design element for achieving maximum efficiency in cross-border payment systems. He acknowledged that while countries may prefer to design their systems based on domestic considerations, a plug-and-play approach could help maintain sovereignty while ensuring replicability. India has already made strides in this direction and is working towards developing such a system for the benefit of the global community. Das highlighted the need for traditional payment systems and CBDCs to be interoperable, not just within their own categories but also with each other. He noted that technical barriers could be addressed through common international standards, but the governance structure for long-term sustainability remains a challenge. Das pointed out that while wholesale markets have seen significant efficiency improvements, retail cross-border transactions still face multiple layers that add to costs and delays. He stressed the importance of ongoing initiatives and experiments in bilateral and multilateral arrangements to bring efficiency to cross-border payments, a recurring agenda for the G20 and international standard-setting bodies. India, which assumed the G20 Presidency in December 2022, has digital asset regulation as one of its key agendas. The Department of Economic Affairs is preparing a consultation paper on cryptocurrency legislation, expected to be released in September or October.