Shaktikanta Das, Governor of the Reserve Bank of India (RBI), cautioned on Wednesday that private cryptocurrencies will cause the next financial crisis, adding that cryptocurrencies should be prohibited.
The country’s central bank governor further stated that cryptocurrencies have no underlying value and represent a risk to macroeconomic and financial stability.
Earlier this month, a top RBI official claimed that transactions involving central bank digital currencies (CBDC) would be anonymous “to a certain extent,” adding that technical and regulatory requirements may be investigated to achieve that anonymity. The pilot project for India’s digital currency, or e-rupee, began on November 1, when it was launched for an initial trial.
Originally intended only for bank-to-bank settlements, the project’s scope was broadened to cover consumer and retailer-led transactions on December 1.
The RBI has yet to clarify the extent to which CBDC transactions will be anonymous, but the income tax department allows cash transactions up to a certain limit to be carried out without providing any government identity proof, and the same rules may apply, according to RBI governor Shaktikanta Das at a post-policy press conference.
For deposits exceeding Rs. 50,000, it is currently required to provide proof of Permanent Account Number, a unique 10-digit alphanumeric number provided by the Income Tax Department to taxpayers.
Bankers have raised concerns about the idea, claiming that in its current form, CBDCs, which are identical to internet-based banking transactions, offer no benefits.
Many of them also believe that the Unified Payments Interface (UPI) fast real-time consumer payments system, which allows consumers to transfer money between banks without giving account information, will be a tough opponent for retail e-rupee use.
