Reserve Bank of India stresses CBDC risks

Since its December 2022 launch, adoption has been limited, with only 1 million retail transactions by mid-2024, despite incentives.

India’s satellite broadband market is projected to grow to $1.9 billion by 2030.

The Reserve Bank of India (RBI) is taking a cautious approach to expanding its central bank digital currency (CBDC), the e-rupee, as officials prioritise understanding its long-term implications. Deputy Governor T. Rabi Sankar emphasised that while CBDCs could transform cross-border payments, trade settlements, and remittances, the risks and uncertainties surrounding the technology remain a concern.

Launched in December 2022, the e-rupee has seen limited adoption, with just 1 million retail transactions by mid-2024. This slow uptake has been partly supported by incentives, such as salary distributions in the digital currency. Despite this, the RBI has no fixed timeline for a broader rollout, preferring to assess the potential impact on the financial system before proceeding.

Deputy Governor Michael Debabrata Patra has raised additional concerns, warning that CBDCs could destabilise traditional banking. He suggested that during financial crises, digital currencies might be seen as “safe havens,” increasing the risk of bank withdrawals and possible “bank runs.” These uncertainties underscore why the RBI is maintaining its measured stance, ensuring that any expansion is informed and mitigates risks.