RBI governor says India supports crypto technology but remains wary of cryptocurrencies

India supports technologies associated with crypto assets but remains cautious about cryptocurrencies themselves, Reserve Bank of India Governor Sanjay Malhotra said on Saturday. Speaking at the Kautilya Economic Conclave, Malhotra said the country was encouraging innovation in areas including distributed ledger technology and tokenisation. He said some of those technologies were being used in the central bank and outside it through public-private partnerships.

He distinguished that approach from the RBI’s position on cryptocurrencies, which he described as cautious. The governor cited concerns about monetary sovereignty, monetary policy and capital flows, especially in emerging market economies where restrictions on capital movements exist. Malhotra said the issue also involved maintaining the “singleness of money”.

He argued that the main challenge was not domestic payments, because such payments were already fast, inexpensive and convenient in India and many other countries. The more significant difficulty, he said, was cross-border payments. He said alternative solutions could be explored, including central bank digital currencies, without providing further details in the material supplied.

The governor also addressed rising public debt and higher bond yields globally. He said yield movements were fundamentally determined by demand and supply, while government and private-sector spending had increased, partly because of artificial intelligence. “Money is scarce, spending has increased, both by the government as well as private enterprises, led by AI,” he said, linking those developments to harder bond yields and higher debt.

Malhotra said the RBI’s monetary policy primarily focused on India’s domestic growth and inflation conditions. However, he added that global interest rates affected India, including through their influence on real interest rates, and said that impact needed to be considered.