when authorities globally are clamping down on cryptocurrencies, that innovation is being stifled, is not really valid. undoubtedly, we see a critical role for the fintech ecosystem to act as a force multiplier as we seek to achieve our goals of financial inclusion, digitalisation and customer protection. rbi has taken several steps to create a nurturing environment to foster innovation. in 2016, we issued guidelines for account aggregators ( aas ), recognizing their potential. in 2017, regulations were established for peer - to - peer ( p2p ) lending, even at a time when the sector was nascent in india. the regulatory sandbox framework released by the reserve bank in august 2019 was intended for the purpose of fostering innovation. the response to the regulatory sandbox has been encouraging to say the least. an interoperable regulatory sandbox ( iors ), to facilitate testing of hybrid products / services falling within the regulatory ambit of more than one financial regulator is in place. in november 2021, the reserve bank launched its first global hackathon - " harbinger with the theme'smarter digital payments '. the hackathon received encouraging response with 363 proposals submitted by teams from within india and from 22 other countries across the globe. as a sequel, we have also announced the second hackathon with the theme " inclusive digital services ". in 2021, the reserve bank established its own innovation hub called the rbih here in bengaluru to support creation of an innovation ecosystem through collaboration among financial institutions, the technology industry, and academia. rbi and the innovation hub have commenced pilots in the states of madhya pradesh, tamil nadu, up and maharashtra for fully digitalized kisan credit card loan, which is being disbursed in 2 / 3 bis - central bankers'speeches minutes. similarly, pilot on fully digital dairy loan based on milk pouring data has commenced in gujarat. rbi has launched the rupee central bank digital currency ( cbdc ) pilot. currently, 10 banks are participating in the wholesale pilot and 13 banks are part of the retail pilot. both the pilots have been going on successfully and we have been able to test various technical architecture, design choices and use cases. as on june 30th, in the retail pilot, we had crossed more than one million users and more than 262, 000 merchants. the digital form of currency brings along the multiple possibilities which can bring innovation and efficiency such as features of offline, programmability,

there is also an important conceptual argument against the “ new normal ” hypothesis. as india ’ s integration with the world picks up pace over the next decade, it is important also that our inflation rate is in line with global inflation. a new normal based entirely on domestic considerations will result in a permanent wedge between domestic and global inflation which means a persistent real appreciation of currency. real appreciation is unambiguously contractionary and militates against our growth aspiration. to support sustainable growth during a period when the economy is globalizing, our inflation rate needs to converge with the global inflation rate. this is the rationale behind the reserve bank ’ s policy of calibrating its medium term inflation goal to global inflation. 51. this is an appropriate context for me to respond to the argument for a new normal based on the ppp convergence argument. our view on this is that ppp convergence cannot be a policy goal, and accepting higher inflation to aid ppp catch up will be both futile and indefensible. as india ’ s per capita income rises, ppp convergence will happen automatically. we need to make sure that rise in incomes is accompanied by productivity gains so that the process of ppp catch up is non - inflationary. 52. there is also no a priori reason to believe that the entire burden of adjustment on account of integration with the global economy will have to come by way of the price differential closing. part, if not all, of the burden can be borne by exchange rate adjustment too as evidenced by the experience of japan starting the 1960, when the yen appreciated by over 300 per cent to close the price gap. how the burden of adjustment is shared between price levels and exchange rates will depend on country circumstances – in particular the economy ’ s structural constraints and market rigidities. 53. to support sustainable growth during a period when the economy is globalizing, our inflation rate needs to converge with the global inflation rate. we need to manage this convergence by calibrating the “ inflation differential ” over time rather than acquiescing in a new normal for inflation. conclusion 54. admittedly, the average inflation rate in india over the last three years has trended up. nevertheless, the context presents neither a necessary nor a sufficient condition for the reserve bank to revise its inflation goal. not a necessary condition because, as indicated earlier, much of our inflation is driven by supply constraints which can be corrected by appropriate policies and their effective implementation. accepting a new