The Reserve Bank of India (RBI) continues to expand its central bank digital currency (CBDC) pilot program with new plans to promote the digital rupee for international trade payments. Less than a year after introducing its wholesale and retail trials, the central bank has announced several projects to expand locations and number of partners, as well as potential use cases.

“CBDC is going to be the future of money. We are preparing for that,” Shaktikanta Das, governor of the RBI, said during a recent interview with Central Banking, which was reported by the Economic Times.

“By the end of this month, we expect to reach around one million retail CBDC users. That’s for domestic payments. But cross-border payments will also be much faster, smoother and more cost-effective. That is another area where close attention should be paid. We are constantly in dialogue with other central banks that have introduced or are introducing CBDCs.”

Reference to trade could include a previously announced partnership with the United Arab Emirates (UAE) for cross-border CBDC transactions, targeting remittances and trade. The two countries have strong economic ties due to the large number of Indian migrant workers in the UAE, so the bridge could help both countries reduce costs and improve efficiency in cross-border payments.

Wholesale CBDC Testing

The RBI has been quite busy since it launched its first wholesale tests in November last year, and it has progressed quite quickly compared to other countries. In February, we reported on their plans to explore different business models and expand on the original goal of using the digital rupee to settle government bond transactions. Examples include money market funds and short-term loans, such as demand money.

CBDC Retail Plans

As for its retail tests, the RBI said in May that the results so far have been quite satisfactory. Despite having less than $1 million digital rupees in circulation, the central bank was interested in expanding the scale of the experiments with ten more regions and five more banking partners.

Its governor now aims to reach one million users by the end of the month, up from 50,000 in February. An important factor is the success of the country’s UPI system for instant payments, which is already well established and quite efficient.