RBI Governor Shaktikanta Das said on Friday that the government and the central bank are discussing cross-border rupee trade with South Asian countries.
He also said that the central bank digital currency (CBDC) is in the trial phase and that the RBI is going with caution in the launch of the digital rupee.
After a successful launch of the wholesale pilot, the Reserve Bank of India (RBI) launched its retail CBDC pilot project on December 1, last year.
With the global trade prognosis for 2022-23 looking bleak, Das said in his keynote talk at an IMF conference here that stronger intra-regional trade in the South Asian area might boost chances for development and employment.
“At the central bank level a key dimension for cooperation has been learning from each other on common goals and challenges… Rupee settlement of cross-border trade and CBDC, where the RBI has already started moving forward, can also be areas of greater cooperation in future,” Das said.
The Governor listed six policy goals for the South Asian region to address significant problems such as Covid, inflation, financial sector tightening, and the Russia-Ukraine war.
“Multiple external shocks… have exerted price pressures on South Asian economies. For successful disinflation, credible monetary policy action, targeted supply-side interventions, fiscal trade policy and administrative measures have become key instruments,” Das said.
While the recent softening of commodity prices and supply-side limitations should support to cut inflation in the future, Das says that threats to growth and the investment outlook may increase if inflation remains high.
Prioritizing price stability may be the best option for South Asia, he said.