A handful of currencies currently dominate global finance, and there is a need to reduce risk by diversifying the international monetary system into liquid currencies, Reserve Bank Deputy Governor T Rabi Sankar said Thursday. Speaking at the launch of a hackathon organized as part of India’s G-20 Presidency, Sankar also called for central bank digital currencies (CBDCs) to be further adopted by other countries as well, calling fiat digital currency essential for maintaining financial integrity. .

It may be noted that India began its efforts to internationalize the rupee last year, in which the effort is to reduce reliance on dollar-dominated trade, by making rupee payments possible . So far, 18 countries have opened rupee accounts.

“We have a global financial system that is dominated in terms of transactions, in terms of billing, in terms of use for hedging and other purposes by a few handfuls of reserve currencies.

“So it would probably be in the interest of the international monetary system to have somewhat more diversified liquid currencies, which could … have the added benefit of reducing the risks of the global financial systems, instead of a reliance on a few only, depend on more,” Sankar said.

The right infrastructure and liquidity is quite achievable regardless of the currency involved, he said, adding that forex pricing can be much more efficient than what exists today if such an initiative is undertaken. .

The Indian central banker said there is a need for wider adoption of the CBDC and called on his peers around the world to ensure that private virtual currencies such as Bitcoins are not allowed to grow and that any adoption digital currency is limited to fiat currencies or those issued by monetary authorities.

“It would therefore be in the interest of the global financial system to maintain the achievements it has achieved over the past two decades by making as much effort as possible to ensure that all or most uses of digital currency are limited to fiat currencies,” he added. Sankar said India’s public sector model leads by creating the necessary infrastructure, and the private sector responds by coming up with innovations that can work on the platform. form created by the state and which can be imitated all over the world.

The RBI and the BIS Innovation Hub (BISIH) of the Bank for International Settlements have jointly launched the fourth edition of the G20 TechSprint, a global technology competition to promote innovative solutions to improve cross-border payments.

The event open to developers worldwide will focus on three problem statements on cross-border payments, including solutions to reduce the risk of illicit finance, exchange and liquidity technology solutions to enable settlement in market currencies emerging and developing economies (EMDE) and technological solutions. for multilateral cross-border CBDC platforms.