Audio version of the article
India has been taking steps towards its own form of digital currency called the Central Bank Digital Currency, which RBI might roll out in December for trials.
Shaktikanta Das, the governor of the Reserve Bank of India (RBI), expressed on Thursday at an event organized by The Indian Express and the Financial Times, that the central bank continued to report “serious and significant” concerns about cryptocurrencies like Bitcoin, reported BTI. This concern has been conveyed to the Government of India, but that said the final call on the matter is to the government and according to the report it is up to them to decide what to do with it. Das added that RBI would like credible explanations and answers about the value that such instruments (cryptocurrencies) can have for the Indian economy.
It should be noted that cryptocurrencies have been under regulatory oversight for some time, with the government still undecided whether or not to allow them fully, despite their apparent lack of regulation, highly complex mining processes, and price volatility that make them so make an unstable financial instrument. At the moment, according to the report, calls have been made to treat cryptocurrencies as foreign assets. One of the first countries to recognize Bitcoin as an official asset was El Salvador. recognized the digital asset earlier this week on September 7, 2021. The country has decided to introduce cryptocurrencies as legal tender. As a result, the country has also seen waves of turmoil following the currency revaluation by 20 percent in a single day, the reports say.
Speaking at the event, Das said, “We have conveyed our serious and major concerns about cryptocurrencies to the government from a point of view of financial stability. The government will take a decision.”
“I think we need more credible answers as to whether going forward, the whole private cryptocurrencies, what contribution it will make to the Indian economy going forward. I think we need to be convinced with more credible explanations and answers,” he added.
The apex bank had initially banned domestic lenders from facilitating investors’ cryptocurrency trading, but this was reversed after the Supreme Court overturned the order. Some banks are said to have resumed these services at the beginning of March this year. According to the report, Das said he had reason to believe the government shared the concerns expressed by the RBI. As an aside, India has moved towards its own legally recognized form of the digital rupee. Currency, RBI is preparing for a step-by-step introduction of the asset. That had mentioned last month that the digital currency would start with test programs by December. In contrast to the cryptocurrency, the digital currency is regulated by the central bank. It will not be an asset, so to speak, but a digital representation of the current currency system and one-to-one exchangeable with the Indian rupee.
Cryptocurrencies, on the other hand, can be thought of as commodities that have a fixed value, such as gold or silver. This value is the same in all areas, regardless of the country in which they are sold. The only factor to consider is the currency conversion rate that this value would represent. That had mentioned that the RBI was aiming to bring the central bank’s digital currency to market as a massive digital asset. The RBI had released a notice stating that the central bank’s digital currency and the interest rates it has as an asset are universal. However, only a few countries have even come close to reaching the pilot phase to start such an attempt.