RBI Officials Discuss Cryptocurrency Concerns in India

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Top RBI officials warned a parliamentary committee that digital currencies might lead to the dollarization of a portion of the economy, detrimental to India’s sovereignty.

Top RBI officials expressed their concerns about digital currencies before the Parliamentary Standing Committee on Finance, which former finance minister Jayant Sinha led. They claimed that digital currencies threaten the financial system’s stability.

It would substantially damage the RBI’s competence to make monetary policy and control the monetary system of the nation.

While recognizing that digital currencies have the prospects to become transactional currencies that could eventually replace the rupee, central bank officials remain skeptical, stating that while they can replace a part of the monetary system, they will also hinder the RBI’s capacity to control the flow of money.

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As per central bank authorities, cryptocurrencies are not only implicated in terrorist financing, money laundering, and drug trafficking, but they also pose a greater danger to the country’s financial system’s stability.

Although banking authorities’ major issue with cryptocurrencies is the “dollarization” of the Indian economy, they are also concerned about what cryptos may do to its financial system.

Digital currencies will have a detrimental influence on the financial system, according to RBI officials, since individuals will start investing their hard-earned money in crypto, leaving the bank with fewer money and resources to lend.

India presently has between 15 and 20 million cryptocurrency investors.

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