India is working to revolutionize its cross border payment system. The aim is to make the payments faster and cheaper to help the growing economy. Along with this, the role of Central Bank Digital Currencies (CBDCs) and the concerns around AI is also in focus. These are reshaping the future of the financial sector. Let's dive into what's happening and how it might affect us.
Faster and Cheaper Cross Border Payments
Governor Shaktikanta Das is serious about reducing the time and cost it takes to send money overseas. This is important, especially for economies like India. For expanding Real Time Gross Settlement (RTGS) in India, he suggests using major currencies like USD, EUR and GBP. This can help in making smoother global payments.
Das also said India is looking into cross border payment systems. The government is exploring potential partnership with other countries to make cross border payments easier for everyone.
The Promise of CBDCs
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.
AI in Banking
As AI becomes more common in the banking world, it brings both opportunities and risks. Das raised concerns about how AI could be misused. He warned that AI could lead to cyberattacks and data breaches if not handled carefully. Banks need to be cautious, using AI only when they have proper security in place.
But AI isn't the only concern. Cryptocurrencies also pose risks to financial systems. Das is a strong supporter of CBDCs. He believes they can offer a more secure way to handle digital transactions, reducing the chaos that cryptos might cause.
What's Next?
India is working hard to make big changes in the financial world. From making cross-border payments easier to promoting CBDCs, the future seems exciting. But there are risks, like the rise of AI and cryptocurrencies. With the right plans and smart policies, these challenges could turn into great opportunities, helping not just India but the global economy too.