CBDCs would be able to kill case for private cryptos: RBI Deputy Governor T Rabi Sankar

The Deputy Governor further highlighted the RBI’s stand that private currencies should not be permitted, "just because they are backed by hi-tech", adding that any tool that can be used for good can also be put to undesirable uses. Technology, at the end of the day, is a tool, and understanding the limitations of it is needed.
CBDC

CBDCs would be able to kill case for private cryptos: RBI Deputy Governor T Rabi Sankar

New Delhi: In this year’s Union Budget, Union Finance Minister Nirmala Sitharaman had announced the launch of central bank-backed digital currency (CBDC). The digital rupee to be issued by the Reserve Bank of India will be rolled out in the new fiscal year.
Now, the central bank’s Deputy Governor T Rabi Sankar has opined that CBDC might 'kill' the rationale for the existence of private cryptocurrencies. "We (RBI) believe that CBDCs would actually be able to kill whatever little case there could be for private cryptocurrencies," Sankar said this at a webinar organised by the International Monetary Fund (IMF).
He further highlighted the RBI’s stand that private currencies should not be permitted, "just because they are backed by hi-tech", adding that any tool that can be used for good can also be put to undesirable uses. Technology, at the end of the day, is a tool, and understanding the limitations of it is needed so that people do not fall victim, the Deputy Governor underscored.
"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," Rabi Sankar noted.
His statements come days after the government said that the consultation paper on crypto is almost ready.
Pointing out that most cryptocurrencies have an equilibrium value of exactly zero, but are still priced at fantastical levels sometimes, Shankar does not believe that each innovation is desirable. “In this respect, I expect the IMF would take a leading role in clearing the narrative, be it CBDCs or cryptocurrencies,” he stated.
Consultation paper on crypto
On May 30, Economic Affairs Secretary Ajay Seth on Monday shared that the government is almost ready with its consultation paper on crypto. Adding that they have gone into a deep dive into this, Seth told reporters that the consultation paper is fairly ready and for this they consulted not just domestic stakeholders but also organisations like IMF, World Bank.
“We hope we'll soon be in a position to finalise the consultation paper," he added. The official further noted that there has to be a broad framework of participation of all countries on the regulation of cryptocurrency.
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