Why in the news?
Reserve Bank of India has advised the Government of India to place a proposal on linking Central Bank Digital Currencies (CBDCs) on the agenda of the BRICS 2026 Summit, which India will host.
Key proposal
- Link BRICS members’ CBDCs including India’s e-rupee for cross border trade finance and tourism payments.
- Aim is faster settlements, lower transaction costs and reduced dependence on correspondent banking systems.
- RBI clarifies this is not a formal de dollarisation push, but about efficiency and resilience.
Background context
- Builds on the 2025 BRICS Rio Declaration that called for interoperability of payment systems.
- All core BRICS members Brazil Russia India China South Africa are running CBDC pilot projects, none fully launched yet.
Central Bank Digital Currencies Vs Cryptocurrency
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Strategic significance
- Could challenge dollar centric payment rails indirectly amid rising geopolitical tensions.
- Enhances international use of the rupee through regulated digital channels.
- Fits India’s push for safe sovereign digital money over private stablecoins.
Prelims pointers
- CBDC is sovereign digital legal tender issued by a central bank.
- RBI views CBDCs as less risky than stablecoins for monetary and financial stability.
- BRICS was founded in 2009 and later expanded beyond the original five members.
| [2024] Consider the following statements in respect of the digital rupee:Â
1. It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy 2. It appears as a liability on the RBI’s balance sheet 3. It is insured against inflation by its very design 4. It is freely convertible against commercial bank money and cash Which of the statements given above are correct? (a) 1 and 2 only (b) 1 and 3 only (c) 2 and 4 only (d) 1, 2 and 4 |
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