RBI Dy Guv reaffirms crypto scepticism, says CBDC will grow step by step

RBI Deputy Governor T Rabi Sankar said the central bank will take a calibrated approach to rolling out the digital rupee, maintain its firm stance against cryptocurrencies, and push for rupee globalis

The Reserve Bank of India (RBI) will continue to take a measured approach in developing its Central Bank Digital Currency (CBDC), prioritising careful assessment over speed, even as it maintains a firm position against private cryptocurrencies, Deputy Governor T Rabi Sankar said on Thursday (October 30) at Business Standard’s annual BFSI Summit in Mumbai.

 

Responding to a question on the pace of CBDC adoption, Sankar said India was technologically and operationally prepared to expand its digital currency pilots but would refrain from rushing into a full-scale launch. “Many countries are experimenting with CBDC. We do not want to rush or launch it full scale because everyone globally is just starting off. The use cases are still very different and limited,” he said.

 

 

The deputy governor emphasised that central banks worldwide were still analysing the broader macroeconomic and policy implications of CBDCs. “Everyone is waiting to see the impact of CBDC on the economy, so they can calibrate it with their policies. From the start, we have been saying we are in no hurry. Tech-wise, use case, programmability, we are by and large ready,” Sankar said.

 

Cross-border payments and CBDC’s potential

 

Sankar highlighted cross-border payments as a key area where CBDCs could have a transformative effect. “In the cross-border space, there is absolutely no improvement as such. It still takes four to five days for settlement and five to six per cent cost of transaction. To solve this problem, we believe CBDC is the answer,” he noted.

 

CBDCs, he added, have “certain unique use cases where bank money can’t solve the problem of transactions.”

 

RBI reiterates tough stance on cryptocurrencies

 

On cryptocurrencies, Sankar reiterated the RBI’s longstanding view that private digital tokens serve no useful purpose and pose systemic risks, especially for emerging economies. “Our stance on crypto is decided entirely by the way we have analysed and looked at the basic character of cryptos and the purpose they can serve,” he said.

 

According to Sankar, unbacked cryptocurrencies “have no underlying cash flow, no issuer, therefore no value” and cannot be considered financial assets. On stablecoins, which are backed by underlying reserves, he warned of risks to monetary sovereignty. “Stablecoins carry a huge risk of replacing your currency and policy sovereignty. They do not serve a purpose that can’t be done better with CBDC,” he said, adding that their introduction “will create a lot of policy concerns.”

 

Rupee internationalisation and capital liberalisation

 

Drawing a parallel between CBDC development and the internationalisation of the rupee, Sankar said both were long-term strategic goals requiring patient execution. “We want to be a developed country in a very short time. Can you imagine a developed country when your currency is not commonly acceptable for global cross-border trades? We have to build those things now. We have to start the processes now,” he said.

 

“There is no element of panic,” he said when asked about the pace of liberalisation in external commercial borrowings (ECBs) and foreign exchange transactions. “Capital account convertibility is a process, not an event. In this spirit, we have been gradually liberalising capital accounts. Most of inward capital flows are by and large liberalised. What remains under control is what goes out.”

 

Sankar said the RBI’s upcoming proposals on ECBs aim to allow broader access to overseas borrowing while linking limits to leverage ratios instead of blanket cost caps. “Earlier, only financially strong entities could go out and borrow. That affects the cost for everyone else if one of them fails. To address that risk, we are trying to link the amount you can borrow abroad to your leverage. Once we have it, we don’t need to see a cost cap,” he said, adding that a new framework could be announced “in the next couple of months.”

 

Multiple currencies for a stable global system

 

He added that a diversified global monetary system where multiple currencies are used in trade would help reduce global instability. “Many crises happen because of overdependence on one or two currencies. Multiple currencies can ensure a more stable global financial system,” he said.

 

Payments innovation and regulatory balance

 

Sankar also touched on payments innovation and foreign exchange management, noting that the RBI’s intervention on two-factor authentication was intended as guidance rather than regulation. “Technology evolves, so authentication must also evolve. We said you don’t need to rely only on OTP; you can evolve new factors,” he said.