The Reserve Bank of India (RBI) is concerned that cryptocurrencies may impact financial stability in Asia’s third-largest economy. These major concerns have been conveyed to the government, RBI Governor Shaktikanta Das said in an interview with CNBC TV-18.
Prime Minister Narendra Modi’s administration is proposing to prohibit all private cryptocurrencies in the country and create a framework for an official digital currency.
The RBI had banned banks and other regulated entities from supporting crypto transactions in 2018 after digital currencies were used for fraud. But the Supreme Court cut the curbs last year in response to a petition by cryptocurrency exchanges.
Meanwhile, the Central Bank is exploring whether there is a need to issue a digital version of the rupee in the country. “Private digital currencies have gained popularity in recent years,” the central bank had said in a booklet on payment systems in India. “In India, the regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks. Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and, in case there is, how to operationalize it,” it had said.
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Bitcoin, buoyed by a tide of monetary and fiscal stimulus across the globe, has had a volatile five-fold surge over the past year.
Tesla Inc. Chief Executive Officer Elon Musk in recent tweets said Bitcoin prices “seem high,” having earlier called it a “less dumb” version of cash
US Treasury Secretary Janet Yellen hit out Monday over bitcoin, claiming it was inefficient and required a vast amount of energy — and she expressed fear it was used for “illicit” reasons.
“I don’t think that bitcoin… is widely used as a transaction mechanism. To the extent it’s used, I fear it’s often for illicit finance,” she said at an event hosted by the New York Times.
“It’s an extremely inefficient way of conducting transactions. And the amount of energy that’s consumed in processing those transactions is staggering.
“But it is a highly speculative asset, and I think people should beware. It can be extremely volatile, and I do worry about potential losses that investors in it could suffer.”
-With agency inputs
