On December 10, 2024, Shaktikanta Das, outgoing Governor of the Reserve Bank of India (RBI), shared his vision to transform the Indian economy through a central bank digital currency (CBDC), the digital rupee. During his farewell address, Das highlighted efforts made during his six years in office to capitalize on new technologies, including establishing the RBI Innovation Hub in Bengaluru and a regulatory sandbox for fintech innovation.
CBDC: Shaktikanta Das’ vision for the digital rupee in India
Das expressed optimism about the future of CBDCs in the Indian economy, saying that the digital rupee could replace the paper-based economy for good. Additionally, he noted that many central banks around the world are still in initial discussions and experimentations, while the RBI is one of the few that has launched a CBDC pilot. According to Das, “CBDC has enormous potential in the coming years. In fact, it’s the future of money.”
Separately, Das cautions against hasty implementation of a system-wide CBDC without understanding the technology's potential impact on users and India's monetary policy. He pointed out that this understanding would emerge from the generation of user data during the pilot projects, allowing for a gradual introduction of the CBDC.
Could the new governor change everything?
As India welcomes Sanjay Malhotra as its new RBI governor, markets are speculating on the future of monetary policy. Indeed, with inflation and economic growth as pressing concerns, Malhotra's leadership will determine the next steps for the digital rupee and India's financial evolution.
In conclusion, Shaktikanta Das’ vision for the digital rupee represents a crucial step towards a more efficient and modern economy in India. The transition to a CBDC could not only improve domestic payments but also facilitate cross-border transactions, positioning India as a leader in financial innovation.
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