As a seasoned crypto investor with a keen interest in global financial systems, I find the recent address by Shaktikanta Das, Governor of the Reserve Bank of India, particularly intriguing. His emphasis on reducing costs and time for cross-border remittances resonates deeply with me, given my experience sending funds back home to family in India.
During a significant speech at the October 28th conference in New Delhi, Shaktikanta Das, head of the Reserve Bank of India, emphasized the urgent need to decrease both the duration and cost associated with international transactions, which are particularly vital for developing economies such as India.
He 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.”
Governor Das is looking into the potential application of the Real-Time Gross Settlement (RTGS) system for trading in prominent currencies such as the U.S. dollar, Euro, and British Pound.
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 mentioned that India, along with some other economies, are taking steps to strengthen connections within global swift payment systems across borders, both through individual agreements and collective efforts.
Additionally, it emphasized the potential benefits of Central Bank Digital Currencies (CBDCs), particularly their ability to facilitate fast and seamless international transactions.
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 emphasized that standardization and interoperability are crucial aspects when it comes to Central Bank Digital Currencies (CBDCs) facilitating cross-border transactions. This is essential to avoid incidents similar to those experienced with privately issued cryptocurrencies, which currently have the least regulatory oversight.
Additionally, Governor Das discussed the potential for Artificial Intelligence (AI) to be exploited within banking, warning that this could increase instances of cyber-attacks and data leaks. He emphasized that banks and other financial institutions should implement robust safety measures to counter these risks. In essence, he suggested that banks should harness the benefits offered by AI and advanced technology, rather than allowing technology companies to benefit at their expense.
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2024-10-14 16:04