New Delhi: India remains cautious about cryptocurrencies while supporting the development and use of underlying technologies such as distributed ledger technology and tokenisation, Reserve Bank of India Governor Sanjay Malhotra said on Saturday.
Speaking at the Kautilya Economic Conclave, Malhotra said India supports innovation in technologies associated with crypto assets, including distributed ledgers and tokenisation. However, he said cryptocurrencies raise concerns related to monetary sovereignty, monetary policy and capital flows.
Malhotra said some of these underlying technologies are being explored within the central bank as well as through public-private partnership models.
He said the key challenge associated with digital assets is not necessarily domestic payments, which have become faster, cheaper and more convenient in India and several other countries. Instead, cross-border payments remain an area where further solutions could be explored.
According to Malhotra, central bank digital currencies (CBDCs) could be among the technologies considered for improving cross-border payment systems.
The RBI Governor also discussed rising public debt and higher bond yields globally. He attributed movements in bond yields largely to demand and supply conditions, noting increased spending by governments and private-sector companies, including investment linked to artificial intelligence.
Malhotra said the RBI's monetary policy primarily focuses on domestic growth and inflation conditions. However, he added that global interest rates also affect India, including through their impact on real interest rates domestically.
India's cautious approach to cryptocurrencies has remained a subject of policy discussion, while authorities have continued to examine the risks and potential uses of digital financial technologies.
