The Governor of RBI, Shaktikanta Das, declared that the Indian government and central bank are engaging in talks with countries from the South Asia region concerning cross-border trade in rupee. The aim is to enhance opportunities for growth and employment in the South Asian region by promoting greater intra-regional trade. At an IMF conference, the Governor discussed a range of policy priorities to assist with major problems in the region due to COVID-19, inflation, financial market pressures, and Russia-Ukraine conflicts. He highlighted six preeminent objectives during his keynote speech.
Das stated that the RBI is moving carefully and cautiously on the launch of the digital rupee, and it is currently in the trial phase. He added that the central bank digital currency (CBDC) could be an area of greater cooperation in the future. The RBI began its retail CBDC pilot project in December last year after a successful launch of the wholesale pilot.
Das has highlighted the multiple external shocks that have caused inflationary pressure on economies in South Asia and proposed that effective monetary policy, supply-side interventions, fiscal and trade policies, as well as administrative measures are fundamental for successful disinflation. Although lower commodity prices & supply-side constraints should help reduce inflation in the coming months, high inflation levels may still be a threat to economic growth & investments. As such, South Asia must prioritize price stability as the best policy option to ensure a secure future.
Das emphasized that at the central bank level, learning from each other on common goals and challenges is a key dimension for cooperation. He believes that rupee settlement of cross-border trade and CBDC could be areas of greater cooperation in the future.
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In summary, the RBI is exploring the possibility of cross-border trade in the rupee with South Asian countries to enhance growth and employment opportunities in the region. The central bank is also proceeding cautiously on the digital rupee launch, and CBDC could be an area of greater cooperation in the future. The Governor has outlined six policy priorities for the South Asian region to tackle critical challenges and maintain price stability as the optimal choice for the region.
