India’s aggressive push for the cross-border adoption of its Central Bank Digital Currency (CBDC), the digital rupee (e₹), is rooted in economic efficiency, rupee internationalization, and geopolitical strategy. Currently, global cross-border transactions rely heavily on slow and costly correspondent banking systems, often denominating trade in the US dollar.
**1. Reducing Remittance Costs and Friction:** India is the world’s largest recipient of remittances. The digital rupee offers the potential to bypass traditional intermediaries, offering instantaneous, 24/7 settlement at minimal cost. This efficiency gain is crucial for the Indian diaspora and the domestic economy.
**2. Promoting Rupee Internationalization:** By offering the e₹ as a mechanism for international trade settlement, the Reserve Bank of India (RBI) aims to reduce dependence on intermediate foreign currencies (de-dollarization). Settling trade directly in e₹ minimizes exchange rate risk and the associated hedging costs for Indian businesses, thereby accelerating the acceptance and use of the Indian currency globally.
**3. Enhancing Trade Efficiency:** Internationalizing the e₹ would streamline bilateral trade agreements, such as those established via Special Rupee Vostro Accounts (SRVAs). A digital currency infrastructure ensures rapid, auditable, and secure transfers necessary for high-volume trade corridors, significantly boosting ease of doing business.
**4. Strategic Participation in Multi-CBDC Platforms:** Cross-border readiness is essential for India to participate in multi-CBDC (mCBDC) projects led by international bodies like the Bank for International Settlements (BIS). These platforms seek to create shared infrastructure for multiple central banks, offering a resilient and autonomous alternative to traditional global payment rails like SWIFT. This strategic move aligns India with global financial innovation and increases its financial autonomy.
Source: Why India wants the e-rupee to move beyond borders
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