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Tuesday, March 28, 2023

Central Bank Digital Currencies Could Kill Cryptocurrencies – RBI Official

Central Bank Digital Currencies Could Kill Cryptocurrencies – T. Rabi Sankar, Deputy Governor of the Reserve Bank of India (RBI), believes that central bank digital currencies could “kill whatever small case there might be” for cryptocurrencies like bitcoin and ether.

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At a webinar organized by the International Monetary Fund (IMF), RBI Deputy Governor T. Rabi Sankar discussed the potential impact of central bank digital currencies (CBDCs) on cryptocurrencies such as bitcoin and ether, according to local media.

Also Read: Tough Crypto Law Expected in Russia Despite Central Bank’s Softer Stance on Crypto Payments

According to reports, he said:

“We (RBI) believe that CBDCs will be able to kill any potential use cases for private cryptocurrencies.”

The Indian government and central bank refer to all non-government-issued cryptocurrencies, such as bitcoin and ether, as “private cryptocurrencies.”

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The central bank’s stance, according to Sankar, is that cryptocurrencies should not be legalized “simply because they are backed by hi-tech.” He continued:

“Any tool that can be put to good use can also be used for bad. At the end of the day, technology is really a tool.”

Meanwhile, the Indian government continues to work on a crypto policy. The government is finalizing a consultation paper on cryptocurrencies, according to the economic affairs secretary.

The Reserve Bank of India has long warned that cryptocurrencies are a threat to India’s financial system and must never be recognized as legal tender, as some countries have done, including El Salvador. The bank also cautioned that cryptocurrency could lead to the Indian economy being dominated by the dollar.

“A currency needs an issuer or intrinsic value,” Sankar detailed. Many cryptocurrencies with neither are nonetheless accepted at face value, not just by gullible investors, but even by policymakers and academicians.” 

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The official continued:

“Although most cryptocurrencies have an equilibrium value of zero, they are frequently priced at fantastical levels.”

However, the Reserve Bank of India is now working on its own CBDC. The bank announced last week that it will launch the digital rupee in a graded approach.

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