<a href="https://www.mid-day.com/business/business-news/article/rbi-governor-to-fintechs-treat-data-as-fiduciary-responsibility-not-business-asset-23649489" target="_blank" rel="none noopener">Reserve Bank of India (RBI) Governor Sanjay Malhotra</a> on Saturday said the regulator remains cautious about the cryptocurrencies amid concerns on their impact on monetary sovereignty, monetary policy and capital flows, reported news agency PTI.
However, he pointed out that the apex bank has been supporting innovation in technologies underlying crypto assets, including distributed ledger and tokenisation.
"So, our approach has been to promote the underlying technologies, and we are using some of these in the central bank and outside in PPP (public-private partnership) mode. But insofar as crypto is concerned, it has been a cautious approach," he said at the Kautilya Economic Conclave.
<h2>Concern over cryptocurrencies</h2>
The concern over cryptocurrencies is related to the 'singleness of money' and their potential implications for monetary policy, particularly in emerging market economies, where capital flow restrictions are in place, he said.
"The problem that you are trying to address is primarily not so much of domestic payments, because domestic payments within our country and in many countries now are quite fast, cheap and convenient," he said.
He said the significant challenge lies in cross-border payments, where alternative solutions such as <a href="https://www.mid-day.com/business/business-news/article/finance-minister-urges-rbi-to-advance-its-digital-currency-initiatives-sharpen-capabilities-of-digital-rupee-23649642" target="_blank" rel="none noopener">central bank digital currencies (CBDCs)</a> could be explored.
The remarks come as central banks worldwide continue to explore digital currencies and tokenisation while evaluating the monetary and financial stability risks associated with privately issued crypto assets, as per ANI.
In India, the RBI has been developing and testing the digital rupee, its central bank digital currency (CBDC), while taking a cautious approach to regulating private cryptocurrencies.
<h2>Elevated global bond yields</h2>
Globally, a cycle of monetary tightening by central banks has contributed to higher bond yields, and on the rising public debt and higher bond yields globally, Malhotra said the yield movement is essentially a function of demand and supply, with government and private-sector spending rising, including on account of <a href="https://www.mid-day.com/business/business-news/article/rbi-governor-asks-banks-to-use-ai-tools-to-augment-rather-than-replace-human-judgement-23644234" target="_blank" rel="none noopener">artificial intelligence (AI)</a>.
"Money is scarce, spending has increased, both by the government as well as private enterprises, led by AI, and so that's what is leading to the hardening of the bond yields and debts," he said.
Malhotra said the RBI's monetary policy primarily focuses on domestic growth-inflation dynamics. But global interest rates also have implications for India, including through their impact on real interest rates in the country.
"That is something that we need to take care of," he said.&nbsp;
(With inputs from PTI and ANI)

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However, the apex bank has been supporting innovation in technologies underlying crypto assets, including distributed ledger and tokenisation

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