“When your currency is not commonly used or acceptable for global cross-border trades, that does not happen,” he said, adding that India needs to create the right conditions. “The number of invoices in rupees is going up, but it is still quite low. But we believe that if you create conditions, eventually you will reach a situation where people start doing that,” he added.
He noted that it takes time for exporters and importers to shift their mindset and change invoicing practices.
“One of the reasons advanced economies are what they are is because they can largely invoice in their own currencies. So, their businesses don’t have to deal with that risk as much,” he said.
He also stated that the RBI believes the Indian economy and businesses will face less risk if global transactions are conducted in Indian rupees, a principle that applies to every country.
Offering another reason for the rupee’s internationalisation, he said overdependence on a few currencies has led to currency crises. “We believe that for a more stable global financial system, you should have an arrangement where multiple currencies play a global role, not one or a handful. So, from both these points of view, we decided that we should now start promoting rupee as a currency that can be used for cross-border transactions,” he stated.