Reserve Bank of India (RBI) Governor Sanjay Malhotra has urged central banks across the world to prioritize Central Bank Digital Currencies (CBDCs) over stablecoins to facilitate smoother cross-border payments.
Speaking at the annual meeting of the World Bank and International Monetary Fund (IMF) in Washington, DC, he underscored the advantages of CBDCs compared with private cryptocurrencies.
In a discussion with Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, Malhotra said, “Unless other countries also adopt CBDC, we are not going to see the benefits of CBDC insofar as cross-border payments are concerned. So, I would urge all those present from central banks and other jurisdictions that we need to promote the CBDC, because this has huge advantages over stablecoins.”
He highlighted that CBDCs, being fiat-backed, offer advantages similar to stablecoins but preserve the “singleness of money” and ensure the “integrity of money.” Malhotra stressed that widespread adoption by other countries is essential to fully realize CBDCs’ potential in international transactions.
Domestic payments are efficient, and CBDCs focus on cross-border use
Malhotra clarified that India’s domestic payment systems are already efficient, fast, and low-cost. “For India, domestic payments are not an issue. To that extent, we do not need a CBDC or a stablecoin for local payments,” he said. Instead, CBDCs are being piloted to enhance cross-border transactions.
Currently, the RBI is running pilot programs for both retail and wholesale CBDCs. The Governor said that while cryptocurrencies and stablecoins show promise in asset tokenization, they “fall short as the mainstay for monetary systems” and carry risks for monetary policy, capital controls, and financial integrity.
“We believe in India it is the CBDC and not crypto, because [crypto] has huge implications for monetary policy, for controls on the capital account, and for money laundering. We would rather promote CBDC than any other form of crypto, because CBDC has all the advantages,” Malhotra added.
Government signals shift on stablecoins
Malhotra’s comments come shortly after Finance Minister Nirmala Sitharaman suggested a potential shift in the government’s stance on stablecoins. At the Kautilya Economic Conclave earlier this month, Sitharaman noted that innovations like stablecoins are transforming money and capital flows.
“Such developments underscore the scale of the transformation underway. They also remind us that no nation can insulate itself from systemic change. Whether we welcome these shifts or not, we must prepare to engage with them,” she said on October 3 in New Delhi.
Rupee policy and market intervention
On the currency front, Malhotra reiterated that the RBI does not target any specific level for the rupee. He acknowledged the impact of U.S. tariffs and geopolitical tensions on the currency but emphasized that the central bank’s role is to ensure orderly market movement and curb excessive volatility.
The RBI intervened heavily on Wednesday to support the rupee, which had been under pressure, keeping it from breaching the all-time low of 88.80 last touched on September 30.
Looking ahead
Malhotra also noted India’s strong economic growth, describing it as “phenomenal,” with potential upside to the RBI’s growth forecast of 6.8% for 2025-26 if U.S. tariff issues are resolved. Overall, the Governor underscored India’s commitment to promoting CBDCs globally while maintaining a robust domestic financial system.
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