Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar says central bank digital currencies could “kill whatever little case there could be” for cryptocurrencies, like bitcoin and ether.
RBI’s Deputy Governor Discusses Impact of CBDCs on Cryptocurrencies
T. Rabi Sankar (RBI Deputy Governor) spoke out about the impact of CBDCs (central bank digital currencies) on cryptocurrency, such as bitcoin, during a webinar hosted by the International Monetary Fund, local media reported.
According to him, he said:
According to the RBI, CBDCs are able kill private cryptocurrencies.
By “private cryptocurrencies,” the Indian government and the central bank refer to all non-government-issued cryptocurrencies, including bitcoin and ether.
Sankar explained the central bank’s stance that cryptocurrencies should not be permitted “just because they are backed by hi-tech.” He added:
Technology can be used to do good, or it can be used in a negative way. The technology is, in the end, a tool.
Meanwhile, the Indian government is still working on the country’s crypto policy. According to the economic affairs secretary, the government has completed a consultation paper regarding cryptocurrencies.
The RBI has long warned about cryptocurrencies being a threat to India’s financial system and should never be recognized as legal tender like some countries, including El Salvador, have done. It also cautioned that cryptocurrency could cause the Indian economy to become dollarized.
Sankar detailed: “A currency needs an issuer or it needs intrinsic value. Many cryptocurrencies which have neither are still being accepted at face value – not just by gullible investors but also by expert policymakers and academicians.” The official elaborated:
While most cryptocurrency have an equilibrium value that is exactly zero, some are priced at extraordinary levels.
“But even where cryptocurrencies do have value, for example, some stablecoins that are pegged to a particular currency, their unquestioned acceptance seems puzzling to me,” he opined.
India’s central bank is developing its CBDC. The bank said this week that it will take a “graded approach” to launching the digital rupee.
Is it possible for central banks to create digital currencies that could be used as a way to destroy cryptocurrencies such as bitcoin? Please let us know your thoughts in the comment section.
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