India is set to transform its cross-border payment system, aiming to make transactions faster and cheaper to support its growing economy. Central Bank Digital Currencies (CBDCs) and concerns about artificial intelligence (AI) are also gaining attention, shaping the future of finance.
Let’s explore these developments and their potential effects.
Governor Shaktikanta Das is focused on reducing the time and cost of sending money abroad, a crucial goal for economies like India. To improve the Real-Time Gross Settlement (RTGS) system, he suggests using major currencies such as the USD, EUR, and GBP. This approach aims to enable smoother global payments.
Das highlighted India’s interest in developing cross-border payment systems and exploring partnerships with other countries. This initiative seeks to simplify international transactions, making it easier for everyone involved.
CBDCs have huge potential. They could transform the way we send money, especially across borders. India taking a big step has launched CBDC in December of 2022. It is available for wholesale as well as for retail users. The government is also planning to integrate CBDC with UPI and provide assistance to low internet connectivity zones.
Governor Das believes that as cryptos are unpredictable, CBDC can be a safer option as it offers stability. This makes CBDC a better choice for everyday transactions.
As AI becomes more common in banking, it presents both opportunities and challenges. Das has expressed concerns about the misuse of AI, warning that it could lead to cyberattacks and data breaches if not managed properly. He encourages banks to adopt strong security measures before fully embracing AI technologies.
Cryptocurrencies also pose risks to financial systems, and Das is a strong supporter of CBDCs. He believes these digital currencies can provide a more secure way to handle transactions, helping to reduce the volatility associated with cryptocurrencies.
India is working hard to make significant changes in the financial world. From streamlining cross-border payments to promoting CBDCs, the future looks bright. However, challenges like the rise of AI and cryptocurrencies remain. With careful planning and smart policies, these challenges could turn into valuable opportunities, benefiting not just India but the global economy as well.
Is India on the right track? Tell us what you think.
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