• 1 month ago

Top officials of the RBI have told a parliamentary panel that cryptocurrencies can lead to “dollarisation” of a part of the economy which would be against India’s sovereign interest.

While briefing the Parliamentary Standing Committee on Finance which was chaired by the former minister of finance, Jayant Sinha, top officials of the RBI made their apprehensions about cryptocurrencies very clear and said that these pose challenges to the stability of the financial system.

A member of the panel was quoted saying “it will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country.”

While acknowledging the fact that cryptocurrencies have the potential to become transactional currencies that may replace the rupee, central bank officials still have their doubts and stated that these currencies “can replace a part of the monetary system it will also undermine the RBI’s capacity to regulate the flow of money in the system.”

Not only are cryptocurrencies involved in terrorist funding, money laundering and drug trafficing, but they hold an even bigger threat to the stability of the financial system of the country, according to central bank officials.

Although the main concern for banking officials regarding cryptocurrencies is the “dollarisation” of the Indian economy, they also have reservations about what cryptos can do to the banking system of the country.

RBI officials stated that cryptocurrencies will have a negative impact on the banking system as people will start investing their hard earned money in crypto which leaves the bank will less money and resources to lend.

There are currently between 15 and 20 million crypto investors in India.

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