1 year ago
90 The deputy governor of the Reserve Bank of India (RBI), Rabi Sankar, in a discussion with the International Monetary Fund (IMF), made a stance against cryptocurrencies. He stated that India’s launch of a central bank digital currency (CBDC) can put a heavy dent in the growth of cryptocurrencies in the country.
Sankar highlighted the success of India’s fiat-based peer-to-peer payments system, Unified Payments Interface (UPI). The system has witnessed an average transaction and adoption growth of 160% yearly, over the last five years.
He noted that the system draws its success from its simplicity, as he compared blockchain technology with UPI’s growth.
More People Still Lack Access To UPI
Sankar pointed out that blockchain can into existence six years before the launch of UPI. But the technology is still considered growing and is still being referred to as a potentially revolutionary technology. The use cases of blockchain have not expanded as much as was hoped when it was introduced, he added.
While pointing out the benefits of UPI, Sankar also acknowledged that a large population of Indians still do not have access to UPI-based banking because of low access to smartphones. To provide a solution, he says the government is considering offline payment options, which have already started in some parts of the country. Sankar said the option will be available to the entire region soon.
CBDC Can Kill Any Little Use Case For Private Crypto
He also pointed out the crucial roles banks will play to offer liquidity services to the general public in India. He warned that while technology is great for all, it cannot be relied on to create currencies.
“A currency needs an issuer or it needs an intrinsic value,” Sankar noted. He added that most of the cryptocurrencies with neither of these features are only being accepted at face value. Additionally, the governor stated that caution should be taken when it comes to accepting stablecoins, saying people should not accept them blindly as 1:1 fiat pegged currencies. Sankar says he believes that CBDCs can “kill whatever little case that could be for private cryptocurrencies.”
