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Investing.com – Betting on the impending launch of CBDCs in India, the Reserve Bank of India (RBI), has dismissed the idea that stablecoins should be accepted as cryptocurrencies at par with traditional currencies.
“We believe that central bank digital currencies (CBDCs) may actually be able to kill whatever disregard private cryptocurrencies may have,” its deputy governor said.
The Deputy Governor of the RBI shared these thoughts as part of an IMF forum titled “At the Frontier: India’s Digital Payment System and Beyond”.
“Technology is changing at an extremely rapid pace and I do not believe that all innovation is desirable. In this regard, I expect the IMF to play a leading role in clarifying things, whether CBDCs or cryptocurrencies,” he said.
A currency needs an issuer, or an intrinsic value. Many cryptocurrencies, which are neither, are still accepted at face value, he added.
India plans to introduce its CBDC in the current year in a phased manner.
Blockchain faces competition
The Deputy Governor compared blockchain and India’s Unified Payments Interface (UPI) interbank payment system: “One of the reasons for its success [UPI] is its simplicity… Blockchain, which was introduced six to eight years before the launch of UPI, is still considered a potentially revolutionary technology today. Use cases [de Blockchain] have not really been established at the speed hoped for at the start.”
Introduced in 2016, UPI processed more than 5 billion transactions in a month, while the aggregate value of transactions crossed the $1 trillion mark in March 2022 and approached $6 billion in May 2022. It has seen an average transaction adoption and growth rate of 160% over the past five years.