Syllabus: GS-III, Subject: Economy, Topic: Trade and External sector, Issue: Rupee Internationalisation
Context: The RBI and the Bank Indonesia (BI) signed a Memorandum of Understanding (MoU) to promote the use of local currencies for cross-border transactions.
- Aims at promoting the use of Indian Rupee (INR) and the Indonesian Rupiah (IDR)
The Reserve Bank of India (RBI) is actively promoting the use of local currencies for international trade settlements.
Objective: To reduce dependence on the US Dollar (USD).
Benefits:
- Reduced Transaction Costs.
- Lower Exchange Rate Volatility
- Boosted INR Internationalisation: Increased use of INR in trade settlements strengthens its position in the global financial system.
Related Concepts:
| Vostro and Nostro : Terms used to describe the same bank account, when one bank has another bank’s money on deposit.
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