Reserve Bank of India (RBI) Governor Sanjay Malhotra has reaffirmed the central bank’s strong stance in favour of promoting a Central Bank Digital Currency (CBDC) over privately issued cryptocurrencies, citing the latter’s potential risks to India’s monetary policy, capital controls, and financial system stability.
Malhotra, addressing an audience on the future of digital finance, said while cryptocurrencies and stablecoins have demonstrated certain technological advantages, particularly in areas such as asset tokenisation, they cannot form the foundation of a sound monetary system.
“We believe that in India, it is the CBDC and not crypto that holds promise,” Malhotra said. “Cryptocurrencies have serious implications for monetary policy, capital account management, and anti-money laundering frameworks. We would rather promote CBDC, as it offers all the benefits without the systemic risks.”
The Governor’s comments underscore the RBI’s long-held concerns about the proliferation of cryptocurrencies, which the central bank has repeatedly described as a threat to financial sovereignty and macroeconomic stability. The RBI has maintained that unlike cryptocurrencies — which lack intrinsic value or sovereign backing — a CBDC is a digital form of legal tender issued and regulated by the central bank, ensuring both transparency and accountability.
India’s CBDC Approach and Current Progress
Malhotra highlighted that India’s domestic payments ecosystem is already among the most efficient globally, thanks to innovations such as the Unified Payments Interface (UPI) and Immediate Payment Service (IMPS).
“For India, domestic payments are not an issue,” he noted. “We already have fast, low-cost, and instantaneous systems for both wholesale and retail payments. Therefore, we do not need a CBDC or stablecoin for domestic transactions.”
Instead, he said, the primary objective of India’s CBDC pilot is to enhance cross-border payments, which continue to face high costs and lengthy settlement times under the existing international banking system. “The CBDC is really meant for cross-border transactions, and for that, we are already conducting pilots,” Malhotra stated.
Global Coordination Needed
However, Malhotra cautioned that the full potential of CBDCs in cross-border use cases will be realised only when other countries also adopt similar frameworks.
“Unless other jurisdictions embrace CBDCs, the benefits will be limited,” he said. “I would urge all central banks to promote CBDCs — they have fiat backing, can be tokenised, preserve the integrity of money, and offer clear advantages over stablecoins.”
The RBI has been running pilot projects for both retail and wholesale CBDC transactions, with an aim to evaluate its scalability, interoperability, and integration with existing payment systems.
Malhotra’s remarks reaffirm India’s regulatory direction — prioritising a state-backed digital currency while maintaining caution toward privately issued crypto assets that could disrupt the country’s monetary and financial stability.
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