The deputy governor of the Reserve Bank of India recently made a case in favor of CBDCs or Central Bank Digital Currencies. He also drew parallels between the development of Unified Payments Interfaces or UPIs development with blockchain networks. It is worth noting that UPI is a digital payment network introduced by NPCI that interconnects several banking networks within and outside of India.
Rabi Sankar, the Deputy Governor of RBI, was recently participating in discussion with the International Monetary Fund, IMF. His stance on the matter suggested opposition to the development of cryptocurrency markets in the region. It is worth noting that the Indian government has already imposed heavy taxes on crypto investors, up to 50%, which has resulted in major crypto organizations opting to leave the country.
Talking about the success of the UPI network, Rabi Sankar claimed that the localized and fiat-supporting peer-to-peer digital transactions platform UPI could replace the need for private cryptocurrencies in the marketplace. He also claimed that the UPI adoption and transaction growth in the country recorded at 160% in the last five years.
He further explained that, unlike blockchain and private cryptocurrencies, the UPI network is much easier to understand and use. He commented that blockchain technology use cases are still in the development phase despite being introduced six years before the UPI network.
On the other hand, Sankar admitted that a large part of the Indian population does not have access to the UPI network due to the lack of internet and Smartphone access.
Offline Digital Wallet for CBDC
After China banned cryptocurrencies under its jurisdiction last year, the government of India is following its example. In addition to imposing a passive ban on the cryptocurrency industry, the Indian authorities are also working on introducing a new offline digital payments wallet. According to the latest statements of Sankar, the offline wallets will work towards making the UPIs and CBDC facilities available on a larger scale.
Furthermore, Sankar claimed that the Indian banking sector and financial regulators are going to preserve its monopoly on being the central liquidity provider for the masses. He exclaimed that technology is nothing more than a tool, and it cannot be used to issue currencies.
He also derided stablecoins and said that they should not be accepted by consumers as a 1:1 ratio for the local legal tender. In addition, Sankar claimed that stablecoins undermine the value of the Indian rupee.