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Why is RBI against introduction of private cryptocurrencies in India?

RBI Deputy Governor T Rabi Shankar suggest that private crypto assets will have no purpose once CBDC is introduced in the economy.

“Most cryptocurrencies have an equilibrium value of exactly zero, but they are still priced, sometimes, at fantastical levels,” read a statement by the Reserve Bank of India (RBI) Deputy Governor T Rabi Shankar. The statement was part of Shankar’s keynote address at an event organised by the International Monetary Fund (IMF). Why it matters: The RBI has been one of the most staunch opponents of cryptocurrencies in India and its opinion carries a lot of heft within the ministry of finance which is currently deliberating upon how to regulate crypto assets. What was the event about: The session titled “At the Frontier: India's Digital Payment System and Beyond” was held to understand the rapid expansion of digital payments in India and how the growth was facilitated by a digital infrastructure and a supportive policy environment. What is likely to be the role of CBDC: Shankar said that the RBI believes that Central Bank Digital Currencies (CBDC) would be able to “kill whatever little case there could be for private cryptocurrencies”. “The RBI has been working methodically to introduce a digital version of the fiat rupee,” Shankar said, adding that the RBI considers there are three advantages. Better currency management, Reducing settlement risk in the system, especially the interbank system Cross-border payments. “However, since there is hardly any international experience to learn from and since CBDCs can have a significant impact on the banking system in terms of bank's ability to mobilise deposits as well as (its) impact on monetary policy…

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I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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