Central Bank Digital Currencies (CBDCs) vs Stablecoins
The Reserve Bank of India (RBI) Governor, Sanjay Malhotra, stressed the importance of Central Bank Digital Currencies (CBDCs) over stablecoins for international payments during the World Bank Group and International Monetary Fund (IMF) annual meeting.
- Central Bank Digital Currencies:
- Promoted for facilitating cross-border payments.
- Offers advantages like fiat money, tokenization, and integrity over stablecoins.
- RBI is piloting retail and wholesale CBDCs.
- Stablecoins:
- Private cryptocurrencies linked to assets like the US dollar.
- Gaining acceptance globally; linked to US Treasuries for currency promotion.
- Main stablecoins: Tether and USDC, comprising 90% of a $285 billion market.
- Risks include potential dollarisation of the Indian economy.
Indian Government's Stance on Cryptocurrencies
Finance Minister Nirmala Sitharaman highlighted the transformative effect of stablecoins on monetary systems, suggesting a need for adaptation.
- Emphasis on the importance of engaging with evolving monetary architectures.
- Legislative measures in the US and South Korea to regulate stablecoins.
Economic Growth and Outlook
Governor Malhotra praised India's economic growth, despite challenges from US tariffs.
- Current Growth:
- RBI projects 6.8% growth, with potential upside if tariff issues resolve.
- Recent quarter growth of 7.8% exceeds expectations.
- Future Projections:
- World Bank and IMF raised current year growth forecasts to 6.5-6.6%.
- Concerns for next year's growth due to high US tariffs, forecasts lowered to 6.2-6.3%.
