Mumbai: Reserve Bank of India (RBI) Governor Shaktikanta Das has proposed expanding India’s real-time gross settlement (RTGS) system to settle transactions in major trade currencies such as the US dollar, euro, and UK pound through bilateral or multilateral arrangements. This extends RBI’s existing tie-ups with other authorities for linking fast-payment systems for retail transactions.
Bilateral or multilateral arrangements to expand RTGS in global currencies would offer an alternative to traditional cross-border payment systems, which rely on correspondent banking networks.These conventional systems often involve multiple intermediaries, leading to delays, higher costs, and increased complexity in settling transactions across different currencies. RTGS is currently used to send amounts of Rs 2 lakh or more instantly from the remitter to the recipient’s bank, rather than grouping the payments in batches
“India is one of the few large economies with a 24×7 real-time gross settlement system. The feasibility of expanding RTGS to settle transactions in major trade currencies such as USD, EUR, and GBP can be explored through bilateral or multilateral arrangements,” said Das during his keynote address at the RBI@90 High-Level Conference, organized by the central bank in New Delhi on Monday.
RBI has been discussing alternatives to the SWIFT payment system. Last year, in response to a parliamentary question on whether there were alternatives to SWIFT, which faces sanctions risks, Minister of State for Finance Bhagwat Karad mentioned that RBI’s Payments Vision 2025 envisions expanding SFMS and INFINET technology to other jurisdictions, offering faster, cost-effective direct payment channels internationally.
Das also highlighted that central bank digital currencies (CBDCs), currently being tested in India with features like UPI integration and programmability, could work globally with standardization and compatibility. “A key challenge could be that countries may prefer to design their own systems based on domestic considerations. I believe we can overcome this by developing a plug-and-play system that replicates India’s experience while maintaining the sovereignty of respective countries,” said Das. He added that India’s experience in digital public infrastructure could be leveraged by other nations.
In his speech, Das said that the global financial crisis (GFC) and the COVID-19 pandemic prompted central banks to adopt aggressive monetary measures, diverging from their traditional roles. While these actions provided necessary support, post-pandemic concerns have emerged regarding the limitations of easy monetary policy, rising public debt, and central bank independence as banks became lenders of first resort and took negative-yielding assets on their books. He noted that all of RBI’s liquidity measures had exit clauses. However, global public debt is expected to exceed 100% of global GDP by 2029, becoming a growing constraint on monetary policy.
Das also warned that emerging economies face challenges from the spillovers of monetary policies in systemic economies, leading to capital flow and exchange rate volatility. Diverging global monetary policies, such as easing in some countries and tightening in others, complicate financial stability. Additionally, the rapid growth of unregulated private credit markets and rising interest rates increase financial risks. Social media rumors further threaten stability by amplifying market disruptions and triggering panic, worsening an already volatile environment.
