The Digital Rupee (e₹), India’s Central Bank Digital Currency (CBDC), holds significant promise for cross-border payments, aiming to streamline international transactions, reduce costs, and enhance the global use of the Indian Rupee. While still in domestic pilot phases as of November 2025, the Reserve Bank of India (RBI) is actively exploring e₹’s internationalization through bilateral and multilateral initiatives.
This aligns with RBI’s Payments Vision 2025, which envisions CBDC enabling both domestic and cross-border settlements. Below is a detailed overview of its potential, based on recent developments.
Current Status and Pilots
• Domestic Foundation: e₹ pilots provide the groundwork for cross-border expansion. Retail pilots (launched December 2022) now involve 17 banks and over 6 million users, with circulation surging to ₹1,016 crore by March 2025 (from ₹234 crore in March 2024). Wholesale pilots (since November 2022) focus on interbank settlements like government securities, with expansions including tokenized assets such as Certificates of Deposit.
• Cross-Border Exploration: RBI is finalizing roadmaps, technical frameworks, and use cases for cross-border CBDC pilots. Bilateral pilots with select countries are underway to test efficiency and transparency in payments. Multilateral efforts are progressing via the Bank for International Settlements (BIS) Innovation Hub, including Project mBridge—a multi-CBDC platform for real-time cross-border settlements involving central banks from China, UAE, Thailand, Hong Kong, and India (RBI joined in 2022). No firm rollout timelines exist, but pilots emphasize interoperability without disrupting existing systems like UPI.
• G20 Focus: During India’s 2023 G20 presidency, RBI highlighted linking CBDCs across countries as a priority, evaluating infrastructure for global transactions.
Key Benefits
• Efficiency and Cost Reduction: e₹ could enable instant, low-cost cross-border transfers (e.g., remittances, trade settlements) by bypassing intermediaries like SWIFT, potentially cutting fees by 50-80% and settling in seconds rather than days.
• Rupee Internationalization: Supports RBI’s goal to promote INR usage globally, especially for trade with partners like UAE and Singapore, reducing USD dependency.
• Security and Control: As a sovereign digital currency, e₹ offers better oversight for anti-money laundering (AML), capital controls, and monetary policy compared to private stablecoins. RBI Governor Sanjay Malhotra emphasized CBDCs’ superiority for cross-border speed and safety over stablecoins.
• Programmability: Features like geo-fencing or expiry dates could tailor cross-border flows for remittances or aid, ensuring funds reach intended recipients.
Challenges and Risks
• Interoperability Hurdles: Harmonizing e₹ with foreign CBDCs requires standardized tech (e.g., DLT bridges), privacy safeguards, and regulatory alignment—still under testing in mBridge.
• Adoption Barriers: Low global CBDC penetration (only ~10 countries in advanced pilots) and competition from UPI’s international extensions (e.g., UPI-PayNow with Singapore) may slow progress.
• Cyber and Policy Risks: Potential for illicit flows or cyber threats; RBI stresses cautious rollout to avoid financial stability issues.
• No Full Rollout Yet: Cross-border remains exploratory, with domestic pilots prioritized to build scalability.
Future Outlook
RBI’s 2025 updates signal momentum, with Governor Malhotra advocating global CBDC adoption at IMF-World Bank meetings. Expect bilateral pilots to yield proofs-of-concept by mid-2026, potentially integrating e₹ with UPI for hybrid cross-border solutions. For businesses/remitters, this could mean seamless INR-denominated global payments. Track RBI announcements for pilot expansions—current circulation and user growth indicate strong domestic viability as a springboard.
For official updates, refer to RBI’s CBDC page. If you need details on specific pilots or comparisons with other CBDCs, let me know!