In a conversation with the International Monetary Fund (IMF), T Rabi Sankar, Deputy Governor of the Reserve Bank of India (RBI), reflected an anti-cryptocurrency stance by speaking about India’s potential to disrupt the blockchain and cryptocurrency ecosystem.
Rabi Sankar began the conversation by highlighting the success of the Unified Payments Interface (UPI), India’s internal fiat-based peer-to-peer payments system – which has seen average adoption and transaction growth of 160% per year in the last five years.
“One of the reasons for its success is its simplicity”, he added when comparing the growth of the UPI with blockchain technology. According to Rabbi Sankar
“Blockchain, which was introduced six or eight years before UPI started, is even today considered a potentially game-changing technology. The use cases of [Blockchain] They haven’t really established themselves as fast as initially hoped.”
However, the RBI official confirmed that a large population in India still lacks access to UPI-based banking due to unavailability of smartphones. To counter this, the Indian government is working on offline payment platforms, some of which have started to be rolled out en masse.
June 2 at 7:00am ET // At the Frontier: India’s Digital Payment System and Beyond will explore the latest developments in digital payments with a focus on lessons from India as well as future with a significant role for Central Bank Digital Currencies. https://t.co/ZSj7i15fBG pic.twitter.com/X6cVyHewEs
— IMF (@IMFNews) May 31, 2022
June 2 at 7:00 am ET // At the Frontier: India’s Digital Payment System and Beyond will explore the latest developments in digital payments with a focus on lessons from India and the future with an important role for the Bank’s digital currencies Central.
Rabi Sankar also stated that banks will remain crucial in providing liquidity services to the general public in India, warning that the technology is merely a tool and cannot be used to create currencies:
“A currency needs an issuer or needs an intrinsic value. Many non-cryptocurrencies are still accepted at face value. Not only by gullible investors, but also by experts, legislators or academics.”
He further stated that the RBI does not believe that stablecoins, such as Tether (USDT), should be blindly accepted as 1-to-1 pegged fiat currencies. Speaking about the advantages of a digital rupee, Rabi Sankar said:
“We think central bank digital currencies (CBDCs) could actually eradicate whatever little case there might be for private cryptocurrencies.”
On May 28, India’s central bank, RBI, has proposed a three-step graduated approach to implementing a CBDC “with little or no disruption” to the traditional financial system.
As Cointelegraph reported, Finance Minister Nirmala Sitharaman, first revealed the plan to launch a CBDC in 2022-23 with the aim of providing a “big boost” to the digital economy. The RBI report revealed that the central bank is currently experimenting to develop a CBDC that addresses a wide range of issues within the traditional system.
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