RBI flags concerns on cryptocurrencies to government, work in progress for CBDC, says governor Shaktikanta Das

Reserve Bank of India (RBI) Governor Shaktikanta Das.

Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday said the RBI has flagged certain major concerns on cryptocurrencies to the Government and the government will come out with a decision on this.

"Both RBI and the government are committed to financial stability. We have flagged some major concerns to the government on crypto currencies. The government will come out with a decision sooner than later," Das said speaking at the 7th edition of India Economic Conclave.

Das said the central bank is exploring a safe, secure central bank digital currency (CBDC) model in the country and will be cautious to create the technology capability before launching the currency.

“The RBI is exploring a legally safe, secure form of CBDC with utmost precaution to come with a digital currency in India. It is work in progress at RBI,” Das said.

On earlier occasions too, the RBI had hinted about its willingness to explore CBDC but has expressed its concerns on accepting crypto currencies as an exchange of medium. The government is in agreement with the RBI on CBDC, Das said.

"There is no difference of opinion between the RBI and the Government (on cryptocurrencies," Das said.

Das also made a strong pitch to develop the digital lending and payments market in India and said banks need to adapt to the technological changes to work with Fintech companies. “Fintech is expected to challenge the financial sector with innovations,” Das said.

Das said Banks and NBFCs need to enhance skill set to identify risks, adding banks need to raise capital to guard against slippages and prepare for unwinding of monetary, fiscal measures.

In Indian context, retaining the health of banks remains a priority, Das said. Banks need to strengthen their capital base and conduct periodic checks to strengthen their corporate governance and ethics driven culture, Das said.