Kevin Helms
A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of economics and cryptography.
India’s central bank’s digital currency should be able to do everything cryptocurrency can do without risk, official claims – Regulation Bitcoin News
An Indian central bank official claims that if there is anything cryptocurrencies like bitcoin and ether can do, the Reserve Bank of India (RBI) should be able to create a product that will do the same job without the associated risks. “This is essentially what we are doing in the CBDC experiments,” he stressed.
RBI Official on Cryptocurrency vs Digital Rupee
Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar spoke on cryptocurrency and central bank digital currency (CBDC) on Friday at an event organized by the Indian Banks’ Association (IBA).
“We saw an environment where private currencies developed. We realized that this poses a threat to investors, systems and the economy. We also realized that private currencies have shown that digitization of currency can be beneficial,” the RBI official said. “The way to deal with that was to offer a digital currency.”
Referring to non-government-issued cryptocurrencies, including bitcoin and ether, as “private” cryptocurrencies, the deputy governor opined:
If there is something a private cryptocurrency can do, we should be able to create a product that will do it without the associated risks in a more secure format in fiat money backed by the government and issued by the central bank. This is essentially what we are doing in the CBDC experiments.
The RBI launched its first private central bank digital currency (CBDC) pilot on December 1 with the participation of eight banks. The pilot will eventually cover 13 cities across India. The retail digital rupee experiment followed the RBI’s wholesale CBDC pilot that began on November 1 for government bond trading. The wholesale pilot will later be expanded to cover more use cases, including money market instruments.
The Indian central banker noted that the first CBDC pilots are aimed at ensuring the efficiency of all systems. He described:
As we go, the pilots will focus on identifying the right technology on the right architecture for digital currency distribution.
The RBI deputy governor explained that the central bank will build on the digital infrastructure it is creating, stressing that there are many opportunities, including smart contracts and tokenized bonds. He concluded:
There are potentially game-changing choices available, especially in cross-border transactions. There is a huge amount of inefficiency in this process that the CBDC can address.
Meanwhile, the RBI believes that cryptocurrencies, such as bitcoin and ether, should be completely banned. Sankar said in February: “It would be futile to regulate cryptocurrencies,” warning that crypto products are “fundamentally designed to bypass the established financial system, and on a larger scale, the government itself.”
What do you think about RBI Deputy Governor Sankar’s comments? Let us know in the comments section below.
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