Reserve Bank of India (RBI) Governor, Shaktikanta Das on Thursday said that the central bank and the government share similar concerns on cryptocurrencies in India.
“I do not think there is any difference of opinion between the RBI and the Central government on cryptocurrencies,” Das made the statement during his speech at the Times Network India Economic Conclave.
His statement comes against the backdrop of prevailing uncertainty around such digital currencies in India.
Das underlined that both the government and the RBI are “committed to financial stability” and that RBI has flagged some “major concerns” to the government on cryptocurrencies. However, “it is still under examination, the government will come out with a decision on it.”
It can be noted that the RBI had first banned such digital currencies through an order, which was struck down by the Supreme Court last year. The central bank’s concerns stem from the non-fiat nature of such currencies which are touted as the future in some quarters, and in the volatile price movements in them. The RBI had also come out with an appeal cautioning people not to trade in such currencies in the past.
The government, on the other hand, heading to propose a complete ban on such currencies. Reports suggest that the Centre is likely to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 in the ongoing Parliament session
Das on Thursday said the RBI continues its work on a digital version of a fiat currency and is currently “assessing the financial stability implications of introducing such a Central Bank Digital Currency (CBDC)”.
“As the underlying technology is still developing, we are exploring ways for a clear, safe and legally certain settlement finality, which is most crucial for a secure and efficient payment system,” he said.
Das added that there are not many “practical instances” of operationalisation of a CBDC globally, and this calls for “utmost precaution” before India goes ahead.
Meanwhile, Das said digital is the future across the banking landscape and “we will have a lot of shifts taking place on this front going ahead”.
On the forex market and the Indian rupee, he said that it is a dynamic situation, and there are two objectives of the RBI’s forex intervention — to prevent excessive volatility of the exchange rate of Indian rupee against the dollar, and the second theme is that emerging market economics need to build up their own buffers.
Emphasising that emerging market economies should build up their forex buffers, Das said that the recent framework of International Monetary Fund also recognises that forex intervention has become necessary for emerging market economies to deal with volatile situations and to deal with adverse situations.
“We are ready always to keep it (forex rate) stable because certainty and stability are good for investors. It is good for importers, it is good for exporters, in fact, it is good for all stakeholders in economics.”