Key takeaways
– India’s e‑rupee has evolved from a domestic payment experiment into a strategic tool for cross‑border trade, remittances and tourism.
– The e‑rupee is sovereign digital money, enabling direct, final settlement without multiple intermediaries.
– Cross‑border CBDC use aims to address inefficiencies in global payments: high costs, slow settlement and limited transparency.
– Linking the e‑rupee with other CBDCs is being explored to simplify international settlements in sovereign digital currencies.
India’s e‑rupee is no longer just a technical pilot; it’s part of a broader financial and strategic plan. Proposals to extend its use internationally position the e‑rupee as a means to streamline remittances, trade and tourism settlements while supporting India’s geopolitical and economic aims. This article explains what the e‑rupee is, why India is pushing it beyond domestic borders, how cross‑border transactions could work and what challenges must be overcome.
What is the e‑rupee?
The e‑rupee is India’s central bank digital currency (CBDC), a digital form of the rupee issued and guaranteed by the Reserve Bank of India (RBI), functioning like digital cash in wallets. The RBI is piloting retail (public) and wholesale (institutional) versions to test technology, distribution and use cases. Unlike UPI, which moves funds between bank accounts, the e‑rupee itself is sovereign money, allowing instant, final settlement without the traditional web of intermediaries.
The cross‑border problems India wants to fix
International payments today rely heavily on correspondent banking and dollar‑centric systems, which often cause delays, high fees and obscured transaction details. These frictions hurt businesses, migrant workers sending remittances and travelers. India sees the e‑rupee as a way to build a digital, interoperable settlement infrastructure that reduces intermediaries and improves speed, cost and transparency. The RBI has proposed linking the e‑rupee with other countries’ CBDCs—especially among BRICS nations—to simplify trade and tourism payments.
Four strategic motivations for global e‑rupee use
1. Lower costs and faster remittances: India is a top recipient of remittances and has a large diaspora. Direct CBDC corridors or interoperability with other CBDCs could cut out correspondent banks, reducing time and fees for workers, families and small firms.
2. Easier trade and tourism settlements: CBDC linkages can enable direct settlement in sovereign digital currencies, reducing reliance on dollar conversions and simplifying transactions as trade within groupings like BRICS grows.
3. Internationalizing the rupee: Expanding the rupee’s practical use in cross‑border settlements—without framing it as explicit de‑dollarization—could make the rupee more attractive internationally, particularly across Asia and with BRICS partners.
4. A regulated alternative to stablecoins: Private stablecoins pegged to major currencies present regulatory and systemic risks. Cross‑border CBDC arrangements offer a sovereign, regulated option that mitigates fragmentation and oversight gaps.
How cross‑border e‑rupee transactions might work
Policymakers and experts are considering several models:
– Bilateral CBDC corridors: Two central banks create direct settlement arrangements, agree FX mechanisms and align regulations to enable e‑rupee flows.
– Multilateral platforms: Shared technical infrastructures connect multiple CBDCs (similar to the BIS multi‑CBDC Bridge), promoting wider interoperability.
– Linking domestic payment rails to CBDC settlement: Combining UPI‑style payment systems with CBDC settlement would allow existing payment interfaces to process cross‑border transactions while the e‑rupee acts as the final settlement asset.
Barriers to interoperability
Integrating CBDCs across borders is technically and institutionally complex. Challenges include harmonizing technology standards, governance models, AML/CFT compliance, dispute resolution and managing settlement imbalances when one country accumulates another’s currency. Geopolitical dynamics also matter: dominant currency issuers and major trade partners may react to new cross‑border CBDC frameworks. Operationally, central banks must ensure liquidity management, FX pricing and legal clarity for cross‑jurisdictional digital money use.
Key outcomes and milestones
For the e‑rupee to deliver, India will need measurable results: lower transaction costs, faster settlement, wider rupee use in trade and tourism, and successful pilots showing banks and fintechs can transact seamlessly across borders. Milestones include launching pilot corridors with strategic partners, developing robust regulatory frameworks, and securing participation from financial institutions and payment networks.
Positioning India for the future of money
Extending the e‑rupee internationally is part of India’s strategic vision to modernize cross‑border payments, protect financial stability and enhance the rupee’s global role within a regulated digital framework. Whether through bilateral links, multilateral platforms or interoperable payment systems, the e‑rupee could reshape international money flows. Achieving that will require resolving technical, regulatory and geopolitical hurdles—but successful implementation could make cross‑border payments faster, cheaper and more sovereign.
