RBI remains cautious on crypto, backs underlying technology: Governor Malhotra

India's central bank, the Reserve Bank of India (RBI), has maintained a cautious stance on cryptocurrencies while endorsing the underlying technologies, according to Governor Sanjay Malhotra. In an address at the Kautilya Economic Conclave, Malhotra highlighted the bank's support for innovations in distributed ledger technology and tokenisation, but expressed concerns regarding cryptocurrencies due to issues of monetary sovereignty, monetary policy, and capital flows.

The RBI Governor emphasized that cryptocurrencies pose a threat to the singleness of money, a concept critical for monetary policy, particularly in emerging market economies where capital flow restrictions are prevalent.

Malhotra pointed out that while domestic payments within India and many other countries are now fast, cheap, and convenient, cross-border payments remain a significant challenge that could potentially be addressed through alternative solutions like central bank digital currencies (CBDCs). He further discussed the rising global bond yields and hardening of debt, attributing the trend to increased demand and spending, particularly driven by advancements in artificial intelligence (AI).

The RBI's primary focus, according to Malhotra, is on domestic growth and inflation dynamics, but global interest rates also have a bearing on India, affecting real interest rates within the country.