Building on their individual plans to improve the payments system, the central banks of India and the United Arab Emirates embarked on a mission to utilize CBDCs to solve cross-border challenges.
Firms offering digital currency services in India are now covered by the PMLA of 2002, under which they are mandated to make proper disclosures with the FIU-IND and comply with KYC rules.
Reserve Bank of India Executive Director Ajay Kumar Choudhary said that since the CBDC will have all features of physical fiat currencies, it must also be used for offline payments.
RBI's Deputy Governor Rabi Sankar assured that existing payment services in India will remain and that exploring use cases of digital rupees is intended to revitalize the payments sector.
The UPI-PayNow integration will provide a seamless cross-border transaction between India and Singapore, with citizens of both nations being able to make payments using phone numbers or VPA.
India’s digital rupee pilot already had over 50,000 users and 5,000 merchants, but despite the impressive numbers, the Reserve Bank of India noted that it would continue to approach a full-scale launch with caution.
Shaktikanta Das, head of the Reserve Bank of India, says that the best way to regulate the industry is to introduce gambling legislation to control digital assets.
The impact of FTX's collapse may be largely restricted to the digital asset industry, but one effect the crisis had outside of the space was to put the concept of systemic risk back onto the agenda.
The RBI report suggested using the “same-risk-same-regulatory-outcome” principle, which would see the virtual currency service providers being regulated similarly to banks.
Instead of speculative coins, RBI Governor Shaktikanta Das says CBDCs will address the growing 'cryptoization' of the economy while providing benefits in the financial and payments industry.
Thirteen cities will be covered during the pilot, but at the start date, only Mumbai, New Delhi, Bengaluru, and Bhubaneswar will be supported, with the rest coming on board subsequently.
A number of commercial banks will participate in the project with RBI noting that each financial institution will test the CBDC with at least 10,000 to 50,000 of their customers, according to reports.
