RBI Governor Shaktikanta Das on Thursday said that the Reserve Bank has conveyed its "serious and major concerns" about cryptocurrencies to the government and now the Centre will have to decide on how to deal with the proliferation of such platforms.
Das added that he would like to have credible answers on the contribution of private cryptocurrencies to the Indian economy going forward. In March this year, Das had said that he has reasons to believe that the government is in agreement with the major concerns flagged by the RBI.
Private cryptocurrencies like Bitcoin, which are unregulated, mined through a complex process and have highly volatile prices, are under the regulatory gaze in India despite their proliferation as an asset class. Calls have been made to treat it as a foreign asset, and the government is to decide whether to allow them fully or not.
RBI's digital currency expected by the end of 2021
The RBI expects to come out with a model for operations of fiat digital currencies (DC) by the end of the year. Unlike the private cryptocurrencies which are called opaque by critics, the central bank digital currency will be like a currency note which will be regulated. Work on the central bank DC has been on for many years now,.
Earlier this month, RBI deputy governor T Rabi Sankar said that the central bank is internally evaluating the possibility of introducing a fiat digital currency, going into a slew of aspects like its scope, technology, distribution mechanism and validation mechanism.
Central bank digital currencies (CBDCs) are legal tender that are created by the central bank of a nation, though in digital form. According to a survey, 86 percent of central banks in the world are researching CBDCs and 60 percent are already experimenting with them. Some 14 percent of central banks already have CBDC pilot projects in their testing phase.
Another important factor about the growing interest of central banks towards CBDC, according to Sankar, is to wean away citizens from private virtual currencies that may potentially harm them.
(Edited by : Aditi Gautam)
First Published: IST