Following India’s unsuccessful demonitization scheme, the Reserve Bank of India is considering creating its own digital currency
India’s Central Bank, the Reserve Bank of India (RBI), is considering the possibility of issuing its own digital fiat currency as an alternative to Bitcoin, according to Economic Times. The bank expressed its displeasure with cryptocurrencies such as Bitcoin, calling them “private currencies.”
According to the central bank’s executive director Sudarshan Sen:
“As regards non-fiat cryptocurrencies, I think we are not comfortable. Bitcoins for example. That's a private cryptocurrency. Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closely.”
Position of RBI on cryptocurrencies and other developments
The Indian central bank has been continuously issuing warnings to the public about the use of digital currencies like Bitcoin. According to the bank, such currencies present potential financial, consumer protection, legal, and security-related risks.
However, several media reports claimed that cryptocurrencies are becoming increasingly popular to investors. This popularity has reached greater heights since the assumption of Donald Trump as president of the US due to the huge jump in the prices of virtual currencies.
In its comment on the cryptocurrencies in March, then RBI deputy governor R Gandhi said that the potential of virtual currencies is overstated, citing the absence of a monetary authority or central bank supervising their use.
“Value seems to be a matter of speculation. Legal status is definitely not there. While this is a purported objective of a VC, it puts a natural limit for its progression. And finally, the usage of VCs for illicit and illegal activities has been reported as uncomfortably large.”