T. Rabi Sankar, Deputy Governor of the Reserve Bank of India (RBI), says central bank digital currency could “kill any little case there might be” for cryptocurrencies like bitcoin and ether.
The Impact of CBDCs on Cryptocurrencies: A Discussion by the RBI’s Deputy Governor
T. Rabi Sankar, RBI Deputy Governor, spoke about the potential impact on cryptocurrencies (like bitcoin and ether) of central bank digital currency (CBDCs). The webinar was organized by the International Monetary Fund, local media reported Friday.
His quote was:
We (RBI), believe that CBDCs could actually kill any private cryptocurrency cases.
By “private cryptocurrencies,” the Indian government and the central bank refer to all non-government-issued cryptocurrencies, including bitcoin and ether.
Sankar explained that the central bank does not believe cryptocurrencies should be allowed “just because they’re backed by hi tech.”
Every tool that can be used to benefit others can also be used for evil purposes. Technology is, at its core, a tool.
The Indian government continues to work on its crypto policy. The economic affairs secretary has revealed this week that the government is finalizing a paper consultation on cryptocurrencies.
The RBI has warned for years that cryptocurrencies pose a threat to India’s financial system. They should not be accepted as legal tender, like El Salvador and other countries. The bank warned that crypto could result in the dollarization Indian economy.
Sankar explained: “A currency must have an issuer or it requires intrinsic value.” Many cryptocurrencies that have neither of these are being accepted at face price – not only by ignorant investors, but also by experts policymakers.”
Although most cryptocurrencies have an equilibrium value that is exactly zero, they can still be priced at incredible levels.
He stated that cryptocurrencies have value even if they are not pegged to one currency. “But their unquestioned acceptance seems puzzling,” he said.
The Indian central bank is currently working on its own CBDC. This week, the bank stated that it will use a ” Graded Approach” in launching digital rupees.