Mr. Das was at the 39th Annual International Banking Seminar in Washington, D.C., where he delivered a powerful statement. Stablecoins are seen as a threat to India’s sovereignty in managing its monetary system. Speaking at the G30 event, Das said he has ‘very strong reservations’ about stablecoins, which pose a new threat to national currency systems.
The governor pointed out that stablecoins, which are centralized digital currencies backed by fiat currencies, are private money and create an ‘adverse repo rate鏊llow’ and can disrupt India’s payment infrastructure by privatizing the government’s role in the payments system. As if suggesting that every business needs to adopt stablecoins, Das highlights numerous disadvantages of these assets, contrary to the few theoretical benefits of their use.
However, Das pushed for Central Bank Digital Currencies (CBDCs) to replace the FID, which he considered safer and more reliable. Praising CBDCs’ assets, Das noted that the government issues them, offers guaranteed settlement without collateral, and is safer than privately issued stablecoins.
RBI Advances CBDC Pilot Program, Eyes Integration with UPI for Wider Adoption
He also reported the status of CBDCs in India, where the pilot launched back in December 2022 and received positive responses. The Indian central bank’s digital rupee experiment with 16 participating banks is undergoing different use cases, including offline retail transactions and programmable money, which seeks to empower the unbanked/underserved masses further. ‘CBDCs’ explicit programmability could be a game-changer,’ Das said, adding that a targeted fund distribution mechanism would have a central role in meeting India’s financial inclusion agenda.
Apart from the benefits of CBDCs, the RBI governor revealed plans to link the digital rupee with the Unified Payment Interface (UPI), through which Indian consumers conduct over 500 million transactions daily. Das also highlighted that the Indian government would not rush to implement the digital rupee but instead would take more time doing some trials to ensure the success of the end results.
These remarks by Das follow reports that India is considering another ban on private cryptocurrencies such as Stablecoins. Barely a week ago, two unidentified officials informed local media that the Indian representatives decided, in consultation with other authorities, that private cryptocurrencies have dangers that overshadow their advantages.
India is preparing a policy note that will likely provide the government’s position on crypt currencies, including stablecoins. The world will closely observe this stance since, despite numerous challenges, including a tough regulatory environment and a strict tax policy for cryptocurrencies, India tops Chainalysis’ global crypto adoption index.
Thus, the RBI seems quite cautious about India’s monetary independence. It evaluates and approaches CBDCs’ fundamentals judiciously while at the same time responding proactively to the challenges posed by fast-developing digital asset environments.
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