RBI Deputy Governor states CBDCs can “kill” Private Cryptocurrency

Key Takeaways

  • T Rabi Sankar talked about the future of digital currency at a webinar hosted by IMF.
  • RBI is working alongside the Indian Government to launch CBDC soon.

T Rabi Sankar, the deputy governor of the Reserve Bank of India (RBI), states Central Bank Digital Currencies (CBDC) might ‘kill’ the rationale for the existence of private cryptocurrencies. He was talking at the “Frontier: India’s Digital Payment System and Beyond” Webinar hosted by IMF.

While reinstating the RBI’s position that private currencies should not be permitted, he remarked that technology is only a tool and cannot be used to make currencies. He further stated that cryptocurrencies despite lacking an issuer or having any intrinsic value are being accepted at face value by “gullible” investors, policymakers, experts, and academicians.

A strong proponent of digital rupee Rabi Sankar said, “We believe that CBDCs could be able to kill whatever little case that could be for private cryptocurrencies.” T Rabi commented that despite most cryptocurrencies having an equilibrium value of exactly zero, they are still priced at “fantastical levels”. Rabi remarked that the “unquestioned acceptance” of cryptocurrencies often puzzles him.

The RBI deputy governor also believes that stablecoins, like Tether (USDT), should not be accepted blindly as 1-to-1 fiat pegged currencies. While comparing the Unified Payments Interface’s growth with blockchain technology, he said that Blockchain despite being heavily regarded as a potentially revolutionary technology haven’t been established that much at speed it initially was hoped for.

He further talked about how the majority of India still lacks access to UPI-based banking due to the unavailability of smartphones. The Central Bank’s Deputy Governor further urged the International Monetary Fund(IMF) to take the lead in shaping the narrative around digital payment systems.

On May 28, RBI proposed a 3-step graded approach for launching CBDC “with little or no disruption” to the traditional financial system. The Deputy Governor’s comments against private cryptocurrencies come at a time when Finance minister Nirmala Sitharaman hinted at the possibility of launching the proposed central bank digital currency (CBDC) in 2023. Sitharaman had announced the launch of the CBDC in her Budget Speech, and the RBI is experimenting with developing CBDC for both the wholesale and retail components.

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Saniya Raahath

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