RBI Governor backs CBDC over cryptocurrencies, cites policy and capital control risks

Reserve Bank of India (RBI) Governor Sanjay Malhotra said the central bank remains firmly in favour of promoting a Central Bank Digital Currency (CBDC) over “any form of cryptocurrency,” citing the latter’s potential risks to monetary policy, capital controls and financial integrity.

Malhotra said while cryptocurrencies and stablecoins have shown promise in asset tokenisation, they “fall short as the mainstay for monetary systems.”

“We believe in India it is the CBDC and not crypto, because [crypto] has huge implications for monetary policy, for controls on the capital account, and for money laundering,” Malhotra said.

“We would rather promote CBDC than any other form of crypto, because CBDC has all the advantages.”

The RBI chief highlighted that India’s domestic payments ecosystem is already highly efficient, with fast, low-cost, and instantaneous systems in both wholesale and retail segments.

“For India, domestic payments are not an issue. To that extent, we do not need a CBDC or a stablecoin for local payments,” he said.

“The CBDC is really meant for cross-border transactions, and for that, we are already conducting pilots.”

However, he stressed that the full benefits of CBDCs for cross-border payments would be realised only when other jurisdictions also adopt similar systems.

“Unless other countries also adopt the CBDC, we will not see the benefits,” Malhotra said.

“I would urge all central banks and jurisdictions to promote CBDCs — they have fiat backing, can be tokenised, preserve the integrity of money, and offer clear advantages over stablecoins.”

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