Reserve Bank of India (RBI) Governor Shaktikanta Das has reiterated his strong support for the Central Bank Digital Currency (CBDC), specifically the Digital Rupee, as a strategic measure to counter the volatility and risks associated with cryptocurrencies. In recent statements, Das emphasized the potential benefits of CBDCs in promoting financial stability and enhancing cross-border payment efficiency.
CBDC as a Stabilizing Force
Das has long championed the Digital Rupee, highlighting its capacity to serve as a stable and regulated alternative to cryptocurrencies such as Bitcoin and Ethereum. He underscored the need for a more controlled digital currency to navigate the unpredictable landscape shaped by these digital assets. According to Das, the Digital Rupee can effectively minimize the risks linked to cryptocurrency volatility, providing a safer option for investors and consumers.
Enhancing Cross-Border Transactions
A significant focus of Das’s remarks was the modernization of cross-border payments. He pointed out that remittances play a crucial role in emerging economies like India, and there is a pressing need to reduce both the costs and processing times of international transactions. The CBDC, he argued, could facilitate faster and more efficient peer-to-peer (P2P) payments across borders.
India’s 24×7 real-time gross settlement (RTGS) system is currently being evaluated for potential expansion to settle trades in major global currencies, including the US Dollar, Euro, and British Pound. Das indicated that the feasibility of this expansion is under consideration through bilateral or multilateral arrangements, with the goal of simplifying global transactions. He believes that integrating CBDCs into these systems could significantly enhance their functionality and reach.
Ongoing Pilot Programs and Opportunities
Das also discussed the ongoing pilot programs designed to explore the efficacy of India’s CBDC, particularly its programmability and interoperability with the Unified Payments Interface (UPI). He stated, “CBDCs present a unique opportunity for India to lead in cross-border payments,” reflecting his optimism about the transformative potential of digital currencies in the financial landscape.
Addressing AI and Cybersecurity Risks
In addition to advocating for the Digital Rupee, Das raised concerns about the potential misuse of artificial intelligence (AI) in the financial sector. He cautioned that while AI holds great promise, it could also expose banks to increased risks such as cyberattacks and data breaches. This highlights the need for robust security measures and frameworks as the financial industry increasingly embraces technology.
Conclusion
Governor Shaktikanta Das remains a vocal proponent of the Digital Rupee, advocating for its implementation as a means to enhance financial inclusion, stabilize the economy, and modernize cross-border payment systems. As India continues to explore the development of its CBDC, the RBI’s approach reflects a broader strategy to mitigate the risks posed by cryptocurrencies while fostering innovation in the financial sector. In July, the RBI and the Securities and Exchange Board of India (SEBI) joined forces to create a comprehensive crypto policy, signaling a cautious yet proactive stance towards digital assets.
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