Cross-Border CBDC: RBI Holds Talks With 4-5 Countries
Why in the news
The Reserve Bank of India said it was talking to a handful of countries about using digital central bank money for payments across borders.
Key facts
- Countries in talks: 4-5, including Asian and advanced European economies.
- Objective: CBDC transaction rails for cross-border payments.
- Targets: faster, cheaper, more efficient payments.
About CBDC
- A digital form of currency issued by the central bank.
- It is legal tender, backed by the central bank.
- Retail use: public transactions; wholesale use: interbank settlements.
Expected benefits
| Benefit | How |
|---|---|
| Cheaper remittances | Fewer intermediary charges and transaction fees |
| Faster transfers | Fewer banking layers and settlement delays |
| Lighter compliance | Simpler verification and regulatory checks |
Exam angle
- Full form: CBDC = Central Bank Digital Currency.
- Two types by use: retail and wholesale.
- Number of countries in talks: 4-5.