Key takeaways
The Indian rupee has evolved from a domestic digital payment experiment to a strategic instrument aimed at influencing cross-border trade, remittances and tourism flows.
The e-rupee represents sovereign digital money, allowing for direct and final settlement without relying on multiple intermediaries for international payments.
India sees cross-border use of CBDC as a way to address long-standing inefficiencies in global payments, including high costs and slow settlement times.
Proposals to link the e-rupee with other countries’ CBDCs reflect India’s effort to simplify trade and tourism deals using sovereign digital currencies.
The Indian rupee is no longer just a technological experiment; has become an important part of the country’s financial plans. With proposals emerging to take it beyond India’s borders, the e-rupee is now positioned as a critical tool for streamlining international trade, remittances and tourism. It 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 the move, how such transactions might work, and what a successful implementation might entail.
What is e-rupee?
The e-rupee is India’s 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 works like digital cash stored in a wallet, with the RBI acting as a guarantor of its value. The RBI is currently running pilot programs for 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 represents sovereign digital money itself. This allows direct, instant and definitive settlement without depending on multiple intermediaries.
Did you know? The idea of cross-border CBDCs gained momentum after central banks realized that even instant domestic payments can take days to settle internationally due to legacy correspondent banking layers.
The cross-border challenges that India aims to address
Today’s international payments rely heavily on correspondent banking networks and systems linked to the US dollar. This often involves delays, high costs, limited transparency and dependence on intermediary banks. These inefficiencies affect businesses, remittance senders, and travelers.
India sees the e-rupee as a potential solution by enabling digital and interoperable infrastructure for cross-border settlements.
Recent policy debates have increasingly focused on international applications beyond domestic use. The RBI has proposed linking the e-rupee with CBDCs of other countries, particularly those of BRICS countries, to streamline cross-border trade and tourism transactions.
Four strategic motivations behind India’s e-rupee global push
A combination of economic, financial and strategic priorities drives India’s interest in taking the rupee beyond its national borders. These goals reflect how New Delhi aims to modernize cross-border payments while strengthening the role of the rupee in global transactions.
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 reduce intermediaries, allowing for faster, lower-cost transfers that benefit migrant workers, families and small businesses.
Simplify trade and tourism agreements: Proposals to connect CBDCs between BRICS countries aim to facilitate payments for trade and tourism by allowing direct settlement in sovereign digital currencies. This would reduce the need for dollar-based conversions or complex intermediary processes, which is especially relevant given the growing trade volumes within the BRICS.
Promoting the internationalization of the rupee: India has long sought to expand the use of the rupee in global trade agreements and financial flows without framing the effort as de-dollarization. Linking the e-rupee with other CBDCs could improve its efficiency and international appeal, particularly in Asia and among BRICS partners.
Provide a regulated alternative to private stablecoins: While US dollar-pegged stablecoins and other private digital assets are seeing broader global adoption, the RBI has warned that they carry monetary and systemic risks due to limited oversight and lack of sovereign backing. A CBDC-based cross-border system offers a regulated alternative that reduces the risk of financial fragmentation.
Did you know? In early global CBDC pilots, banks reported that real-time cross-border settlement reduced the need for large pre-funded nostro accounts, freeing up idle capital for lending or liquidity management.
How cross-border transactions in electronic rupees could work
Experts and policymakers have outlined several practical approaches to enable seamless cross-border use of the e-rupee:
Bilateral CBDC Brokers: Central banks of two countries establish direct arrangements for e-rupee settlement, including currency conversion mechanisms and aligned regulatory standards.
Multilateral platforms: A shared technical infrastructure connects CBDCs from multiple countries, modeled after initiatives such as the Multi-CBDC Bridge, to promote broader interoperability.
Link national payment systems with CBDC settlement: India has been successful in connecting UPI with select foreign payment networks. This approach integrates interoperable payment pathways, with the e-rupee as the underlying settlement asset.
Barriers to global CBDC interoperability
Cross-border integration of CBDC remains complex. Countries should harmonize technology standards, governance frameworks, compliance requirements, including anti-money laundering (AML) and combating the financing of terrorism (CFT) rules, and dispute resolution mechanisms. A persistent challenge is managing liquidation imbalances, where one country accumulates excessive holdings of another’s digital currency without corresponding exits.
Geopolitical factors also play a role, as such initiatives could prompt responses from dominant currency issuers or key trading partners. Managing these efforts requires careful consideration of broader strategic dynamics.
Did you know? Several countries exploring CBDC ties see tourism as a surprisingly strong use case, as visitors could pay digitally in sovereign money without opening local bank accounts or converting cash.
Key results and milestones for the global e-rupee
For India, taking the rupee beyond its borders would mean achieving measurable results. These include lower transaction costs and faster settlement times for cross-border payments, broader international use of the rupee in trade and tourism, and successful operational pilots enabling banks and fintech companies to conduct borderless transactions using the electronic rupee.
Key milestones could include launching pilot corridors with strategic partners, strengthening regulatory frameworks and gaining broader participation from financial institutions.
Positioning India in the future of money
India’s efforts to extend the electronic rupee internationally reflect a broader strategic vision. The policy aims to modernize cross-border payments, safeguard the resilience of the financial system and expand the global footprint of the rupee within a digital and regulated environment.
Whether achieved through bilateral ties, multilateral platforms, or enhanced interoperable systems, the e-rupee could alter the way international money flows are structured over time. However, realizing this potential will require policymakers to effectively address the underlying technical, regulatory and geopolitical complexities.
