Thomas Daniels
India’s Central Bank Adopts Cautious Approach to CBDC Rollout
The Reserve Bank of India (RBI) has adopted a deliberate stance on the nationwide rollout of its central bank digital currency (CBDC), the e-rupee, emphasizing the need to fully understand its broader implications before expanding its use.
Speaking at a conference in Cebu, Philippines, RBI Deputy Governor T. Rabi Sankar highlighted the transformative potential of CBDCs in areas such as cross-border payments, trade settlements, and remittances. Despite these advantages, Sankar cautioned against hastily implementing the digital currency, stressing that uncertainties surrounding its long-term impact remain a primary concern.
“We are in no hurry to roll it out immediately. Once we have some visibility of what the outcome or impact will be, we’ll roll it out. We don’t keep a specific timeline for that,” Sankar told reporters, according to Bloomberg.
The e-rupee, a tokenized version of India’s fiat currency, was launched in December 2022. By mid-2024, the digital currency had facilitated 1 million retail transactions, a figure bolstered by incentives offered by local banks, including the use of the e-rupee for salary distributions. However, adoption has been slower than anticipated.
Concerns Over Banking Stability
The cautious stance aligns with recent remarks by Deputy Governor Michael Debabrata Patra, who underscored potential risks to financial stability. Patra warned that CBDCs might be misinterpreted as “safe havens” during economic crises, potentially leading to a destabilizing shift from traditional bank deposits.
Such shifts, Patra explained, could amplify vulnerabilities in the banking sector, increasing the likelihood of “bank runs” and raising questions about the implications for deposit insurance frameworks.
While the RBI remains committed to exploring the long-term benefits of CBDCs, the institution has reiterated its focus on mitigating risks before committing to a full-scale implementation.
