Reserve Bank of India (RBI) governor Shaktikanta Das, in an exclusive interview with CNBC-TV18, expressed concerns about cryptocurrency but said blockchain technology needs to be exploited.
“We have certain major concern about cryptocurrency. We have communicated that to the government.
It is under consideration and the government will take a call. If required, Parliament will also consider and decide,” said Das. “We have major concerns about cryptocurrency from financial stability perspective,” added Das.
The Reserve Bank of India (RBI) had banned banks from processing transactions relating to cryptocurrency in 2018. Last year, in March, the Supreme Court lifted the ban, stating that it was violative of the freedom of business and profession under Article 19(1)(g) of the Constitution. Since then, cryptocurrency has been operating in a legal vacuum in India.
On central bank digital currency, the governor said it’s a work in progress. “A lot of work is going on. RBI team is working on it both the technology side as well as the procedural side, how it will be launched. We are very much in the game,” said Shaktikanta Das.
The RBI had earlier said it is examining if there is a need to introduce central bank digital currency (CBDC) in the country and is exploring ways to operationalise it, if necessary.
The RBI’s statement came against the backdrop of private digital currencies, virtual currencies and cryptocurrencies gaining popularity in recent years. In India, the regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks.
CBDC is a legal tender and a central bank liability in digital form denominated in a sovereign currency and appearing on the central bank’s balance sheet. It is in the form of electronic currency which can be converted or exchanged at par with similarly denominated cash and traditional central bank deposits.
In February 2020 RBI bulletin, the central bank, citing a survey of central banks conducted by the Bank for International Settlements, had said some 80 percent of the 66 responding central banks have started projects to explore the use of CBDC in some form.
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