SA economies may enhance cooperation over rupee settlement of trade, CBDCs: in IMF meet

Reserve Bank of India Governor Shaktikanta Das on Friday called for greater cooperation from South Asian economies on matters such as trade and rupee settlement of CBDCs.

He said that India’s Central Bank Digital Currency (CBDC) is in an experimental phase and the central bank is moving very cautiously in this direction.

Speaking at the International Monetary Fund (IMF) conference, the Governor of the Reserve Bank of India said, “The key to meeting the challenge of land fragmentation is to revive the efficacy of multilateralism.”

He also urged South Asian economies to undertake deep reforms to increase productivity, adding that the region needs to cooperate on energy security given the region’s dependence on fossil fuel imports.

“Containing inflation, overcoming external vulnerabilities, increasing productivity, strengthening cooperation for energy security, green energy cooperation and promoting tourism are key policy priorities for South Asian countries,” the central banker said.

Das also attributed the 1997 Asian financial crisis, which, he said, affected South Asian countries in terms of capital outflows and increased exchange market pressures.

Over the years, as a crisis mitigation strategy, South-Asian countries prioritize sound macro-economic policies, he said.

RBI’s measured and measured response during the pandemic has helped us extract liquidity and not get caught in the vicious circle.

Das also said that he does not believe in modern monetary theory and any policy response should be calibrated and not wild.

“I do not believe in modern monetary theory. Any policy response cannot be unbridled and must be calibrated,” Das said.

The RBI governor further said that the global growth outlook looks “unimpressive”, adding that intra-regional trade in South Asia is currently at only one-fifth of its potential.