Q. It is a mechanism designed to facilitate cross-border transactions between India and other countries using their respective local currencies without the need for an intermediary currency like the US Dollar. Which one of the following frameworks helps in facilitating this?
Answer: C
Notes:
Explanation – The Local Currency Settlement (LCS) Framework is a mechanism designed to facilitate cross-border transactions between India and other countries using their respective local currencies, such as the Indian Rupee (INR) and the UAE Dirham (AED), without the need for an intermediary currency like the US Dollar. The LCS framework offers direct bilateral settlements in INR and AED, reducing dependency on intermediary currencies and lowering transaction costs. Additionally, it facilitates easier access to trade credit and export advances in partner currencies, fostering greater economic integration.
Source: AIR
