T Rabi Sankar, the deputy governor of the Reserve Bank of India (RBI), has noted that there is no advocacy for blockchain and related technology in India’s banking system, to shift the way money is used in the country. As part of his commentary in discussion with the International Monetary Fund (IMF), Rabi Sankar noted an anti-crypto stance as part of integrating new technology into systems.
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In the discussion, Rabi Sankar emphasised the success of India’s fiat-based peer-to-peer payments system, the Unified Payments Interface (UPI). The system has been implemented and expanded over the past five years and has seen an average adoption of 160% per year, with transactions consistently increasing as more and more users are onboarding. He noted:
“One of the reasons [the UPI] is so successful is because it’s simple… Blockchain, which was introduced six-eight years before UPI started, even today is being referred to as a potentially revolutionary technology. [Blockchain] use cases haven’t really been established that much at the speed it initially was hoped for.”
At the same time, though, Rabi Sankar also noted that there is still a large part of the Indian population that cannot use the UPI banking system because they have no smartphones to access the banking. Currently, the government is developing an offline payment system to solve this issue. On this, Rabi Sankar noted that banks, rather than private exchanges, are necessary in offering liquidity to the Indian public. Technology, according to Rabi Sankar, will be able to harness and be leveraged to increase this, but it won’t be able to establish new currencies or money systems, noting:
“A currency needs an issuer or it needs intrinsic value. Many cryptocurrencies which are neither are still being accepted at face value. Not just by gullible investors but also the experts, policymakers or academicians.”