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

India's central bank, the Reserve Bank of India (RBI), has maintained a cautious stance on cryptocurrencies while supporting the underlying technologies, according to Governor Sanjay Malhotra. Speaking at the Kautilya Economic Conclave, Malhotra highlighted the bank's focus on innovation in technologies like distributed ledger and tokenisation, but emphasized its cautious approach toward cryptocurrencies due to concerns over monetary sovereignty, monetary policy, and capital flows.

Malhotra noted that cryptocurrencies pose challenges related to the singleness of money and their potential implications for monetary policy, especially in emerging market economies with capital flow restrictions. He suggested that the more significant challenge lies in cross-border payments, where solutions such as central bank digital currencies (CBDCs) could be explored.

Concerning global financial trends, Malhotra stated that the hardening of bond yields and rising public debt are primarily driven by increased government and private-sector spending, fueled by advancements in artificial intelligence. While the RBI's primary focus remains on domestic growth and inflation dynamics, Malhotra acknowledged the impact of global interest rates on India, particularly through their effect on real interest rates.