It can be noted that India began its efforts to internationalise the rupee last year, under which the effort is to decrease the reliance on the USD-dominated trade, by making rupee payments possible. So far, 18 countries have opened rupee accounts.
“We have a global financial system that is dominated in terms of transactions, in terms of invoicing, in terms of their usage for hedging and other purposes by a few handfuls of reserve currencies.
“It would probably, therefore, be in the interest of international currency system to have a little more diversified liquid currencies, which could…have the additional benefit of de-risking the global financial systems, instead of a dependence only a few, depend on more,” Sankar said.
The right infrastructure and liquidity are eminently feasible irrespective of the currency involved, he said, adding that forex pricing can be far more efficient than what exists today if such an initiative is undertaken.
The Indian central banker said there is a need for wider adoption of CBDC, and appealed to peers from across the world to ensure that private virtual currencies like Bitcoins are not allowed to grow and any digital currency adoption is limited to the fiat currencies or the ones issued by monetary authorities.
“It would therefore be in the interest of the global financial system to maintain the achievements that it has got over the last couple of decades by putting as much effort as possible into ensuring that any digital currency usage or most digital currency usage should be restricted to fiat currencies,” he added. Sankar said India’s model of the public sector is leading by creating the necessary infrastructure, and the private sector responding by coming up with innovations that can work on the platform created by the state can be emulated across the world.
The RBI and the BIS Innovation Hub (BISIH) of the bank for international settlements have jointly launched the fourth edition of the G20 TechSprint, a global technology competition to promote innovative solutions aimed at improving cross-border payments.
The event open to developers from around the world will focus on three problem statements on cross-border payments, including solutions to reduce illicit finance risk, forex and liquidity technology solutions to enable settlement in emerging market and developing economy (EMDE) currencies and technology solutions for multilateral cross-border CBDC platforms.
