CBDC Will Solve The Problem Of Cross Border Money Transfer: RBI’s Rabi Sankar

The Central Bank Digital Currency has the ability to solve problems with cross border money transfer. While UPI is good, with the complete roll-out of CBDC, customers will at least have a choice, said RBI’s Deputy Governor T Rabi Sankar.

Sankar was speaking at Bharat Inclusion Summit 2.0 by IIMA Ventures in Bengaluru. “I have so far not seen any use case which potentially can solve the problem of cross border money transfer, only CBDC has the ability to solve it,” he said.

CBDC is currently undergoing many alterations both in terms of technology and models, which is aimed at gradually improving its efficiency in users. A key area where digital payments have shown promise is in global retail payments, which are currently slow — up to a week and costly up to 6% for small transactions, Sankar noted.

Traditional banking systems and legal frameworks limit cost reduction in these processes, he said. However, CBDCs can bridge this gap by offering immediate settlement without intermediaries, as they are both digital and a direct form of currency—allowing seamless, borderless transactions.

“One can actually imagine a future when money can be transferred at a fraction of the cost from a person or business in India to a person or business anywhere else in the world, almost instantaneously. Globally, there have been a lot of efforts in achieving efficiency in the payment systems for global transfers. We are not seeing much traction there yet and we believe that CBDCs will be really that,” Sankar said.

Sankar explained that traditionally, there are two types of money — central bank money, like physical cash and commercial bank money like deposits/credit. Central bank money was trusted and easy to use without intermediaries but had limitations like being physical and unsuitable for large or distant transactions. Commercial bank money solved these issues by being digital but required trust and intermediaries. Now, with the introduction of Central Bank Digital Currency, central bank money is becoming digital—combining the trust and simplicity of traditional cash with the convenience and reach of digital banking.