Private cryptocurrencies pose risks, outlines the Reserve Bank of India’s (RBI) concept note on central bank digital currency (CBDC). According to the concept note, these digital assets have negative effects on the financial sector and threaten India’s financial and macroeconomic stability.
“Further, a wider proliferation of cryptocurrencies has the potential to diminish monetary authorities’ power to determine and regulate monetary policy and the monetary system of the country, which could pose a serious challenge to the stability of the country’s financial system” said RBI.
The concept note also said that CBDCs are the next step in the evolutionary progression of sovereign currency.
Central Bank Digital Currency (CBDC) is a digital representation of a central bank’s currency notes. The RBI’s concept note on Indian CBDC also explains the Reserve Bank’s intention for introducing the digital rupee.
The central bank has consistently voiced its opposition to private cryptocurrencies, and RBI governor Shaktikanta Das stated that cryptocurrencies are a clear danger and anything that derives value based on make-believe, without any underlying value is just speculation under a sophisticated name.
“The inherent design of cryptocurrencies is more geared to bypass the established and regulated intermediation and control arrangements that play a crucial role of ensuring integrity and stability of the monetary and financial ecosystems” said the concept note.
