Key takeaways
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India’s e-rupee has evolved from a national digital payments experiment to a strategic instrument aimed at influencing cross-border trade, remittances and tourism flows.
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The e-rupee represents the sovereign digital currency, allowing direct and final settlement without resorting to multiple intermediaries for international payments.
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India sees the cross-border use of CBDCs as a way to address long-standing inefficiencies in global payments, including high costs and slow settlement times.
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Proposals to link the e-rupee to other countries’ CBDCs reflect India’s efforts to simplify trade and tourism settlements using sovereign digital currencies.
The Indian electronic rupee is no longer just a technological experiment; it has become an important part of the country’s financial plans. With the emergence of proposals to export it beyond Indian borders, the e-rupee is now positioned as an essential tool for streamlining international trade, remittances and tourism. This issue is also increasingly being discussed in the context of India’s geopolitical strategy.
This article explores what the e-rupee is and how India plans to use it to address cross-border challenges. It examines the strategic objectives behind this decision, how such transactions might work, and what successful implementation might entail.
What is the e-rupee?
The e-rupee is the Indian Central Bank Digital Currency (CBDC), a digital form of the Indian rupee issued by the Reserve Bank of India (RBI) on par with physical cash. It functions like digital money stored in a wallet, with the RBI guarantor of its value. The RBI is currently conducting pilot programs for both retail (public use) and wholesale (institutional use) versions to test the technology, distribution and practical applications.
Unlike India’s Unified Payments Interface (UPI), which facilitates real-time transfers between bank accounts, the e-rupee itself represents the sovereign digital currency. This allows direct, instant and final settlement without resorting to several intermediaries.
Did you know? The idea of cross-border CBDCs gained momentum after central banks realized that even instant domestic payments could take days to settle internationally due to legacy layers of correspondent banking.
The cross-border challenges India seeks to address
Today’s international payments rely heavily on correspondent banking networks and systems linked to the US dollar. These often involve delays, high costs, limited transparency and reliance on intermediary banks. Such inefficiencies affect businesses, money transmitters and travelers.
India sees the e-rupee as a potential solution in enabling an interoperable digital infrastructure for cross-border settlements.
Recent policy discussions have increasingly focused on international applications beyond domestic use. The RBI has proposed linking the e-rupee with CBDCs of other countries, especially those in BRICS countries, to streamline cross-border trade and tourism transactions.
Four strategic motivations behind India’s global e-rupee push
A mix of economic, financial and strategic priorities drives India’s interest in introducing the e-rupee beyond national borders. These goals reflect how New Delhi intends to modernize cross-border payments while strengthening the role of the rupee in global transactions.
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Reduce costs and improve the speed of remittances and payments: India is one of the world’s largest recipients of remittances and many Indians travel or work abroad. Traditional cross-border transfers involve multiple banks and currency conversions, which increases both time and cost. A direct e-rupee corridor or interoperability with other CBDCs could cut out intermediaries, enabling faster and cheaper transfers that would benefit migrant workers, families and small businesses.
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Simplify commercial and tourist regulations: Proposals to connect CBDCs between BRICS countries aim to facilitate payments for trade and tourism by enabling direct settlement in sovereign digital currencies. This would reduce the need for dollar-based conversions or complex intermediary processes, which is particularly relevant given the growth in trade volumes within the BRICS.
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Promote the internationalization of the rupee: India has long sought to expand the use of the rupee in global trade settlements and financial flows without viewing the effort as dedollarization. Linking the e-rupee to other CBDCs could improve its efficiency and international appeal, particularly in Asia and among BRICS partners.
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Providing a regulated alternative to private stablecoins: As stablecoins and other private digital assets pegged to the US dollar gain increased adoption globally, the RBI has warned that they carry monetary and systemic risks due to limited oversight and lack of sovereign support. A cross-border system based on CBDCs offers a regulated alternative that reduces the risk of financial fragmentation.
Did you know? During the first global CBDC pilots, banks reported that real-time cross-border settlement reduced the need for large pre-funded nostro accounts, freeing up unused capital for lending or liquidity management.
How cross-border e-rupee transactions could work
Experts and policymakers presented several practical approaches to enable seamless cross-border use of the e-rupee:
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Bilateral CBDC corridors: Central banks of two countries establish direct agreements for e-rupee settlement, including currency conversion mechanisms and harmonized regulatory standards.
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Multilateral platforms: Shared technical infrastructure connects CBDCs from multiple countries, modeled on initiatives such as the Multi-CBDC Bridge, to promote broader interoperability.
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Linking national payment systems to CBDC regulation: India has successfully connected UPI to some foreign payment networks. This approach integrates interoperable payment rails, with the e-rupee serving as the underlying settlement asset.
Obstacles to global interoperability of CBDCs
Cross-border integration of CBDCs remains complex. Countries must harmonize technology standards, governance frameworks, compliance requirements, including anti-money laundering (AML) and anti-terrorist financing (CFT) rules, as well as dispute resolution mechanisms. A persistent challenge is managing settlement imbalances, in which one country accumulates excess holdings of another’s digital currency without corresponding outflows.
Geopolitical factors also play a role, as such initiatives could provoke reactions from major currency issuers or major trading partners. Managing these efforts requires careful consideration of broader strategic dynamics.
Did you know? Several countries exploring ties to CBDCs see tourism as a surprisingly strong use case, as visitors could pay digitally in sovereign money without opening a local bank account or converting cash.
Key findings and milestones for the global e-rupee
For India, taking the e-rupee beyond its borders would mean achieving measurable results. These include lower transaction costs and faster settlement times for cross-border payments, wider international use of the rupee in trade and tourism, as well as successful operational pilots that enable banks and fintech companies to conduct borderless transactions using the e-rupee.
Key steps could include launching pilot corridors with strategic partners, strengthening regulatory frameworks and obtaining broader participation from financial institutions.
Positioning India in the future of money
India’s efforts to expand the e-rupee internationally reflect a broader strategic vision. This policy aims to modernize cross-border payments, preserve the resilience of the financial system and expand the global footprint of the rupee in a digital and regulated environment.
Whether achieved through bilateral ties, multilateral platforms, or improved interoperable systems, the e-rupee could change the structure of international money flows over time. However, realizing this potential will require policymakers to effectively address the underlying technical, regulatory and geopolitical complexities.
