Development of a Plug-and-Play System for Cross-Border Payments – RBI and India Initiative in G20 Group

The Reserve Bank of India Suggests Developing “Plug-and-Play” System for Cross-Border Payments

The Reserve Bank of India (RBI) recommends the development of a “plug-and-play” system to facilitate cross-border payments. The goal is to improve interoperability between countries, as emphasized by RBI Governor Shaktikanta Das. He pointed out that a key element of the effectiveness of initiatives in the field of cross-border payments is ensuring interoperability.

Challenges Related to Harmonization and Interoperability

One of the main challenges is dealing with divergences and ensuring interoperability, which can be achieved by designing systems that take into account national specificities. RBI suggests the development of a “plug-and-play” system that will allow for replicability while preserving the sovereignty of individual countries. India intends to continue working on this project for the benefit of the international community.

The Need to Improve Interoperability with CBDC Systems

One significant aspect is ensuring close cooperation between traditional payment systems and Central Bank Digital Currencies (CBDCs). There is a need to ensure that legacy systems can seamlessly interact both among themselves and with the CBDCs of other countries. Achieving this goal may be challenging, requiring, among other things, overcoming technical barriers through the adoption of common international technical standards.

Management and Long-Term Sustainability

One key point is establishing a governance structure that will ensure the long-term sustainability of cross-border payment systems. The G20 and other international institutions emphasize the improvement of the efficiency of international payments, which may lead to further initiatives and experiments in cross-border cooperation.

India Assumes the G20 Presidency

India has taken over the presidency of the G20 for December 2022, with the regulation of digital assets established as one of the priorities. India’s Department of Economic Affairs is preparing key consultations on cryptocurrency legislation, scheduled for September or October. This is another step in the development of financial systems aimed at creating more efficient and harmonized cross-border payments.