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Deputy Governor of the Reserve Bank of India T. Rabi Sankar believes that the digital currencies of central banks can completely supplant private virtual currencies, including bitcoin.
The Reserve Bank of India (RBI) has repeatedly opposed cryptocurrencies, calling them speculative instruments that have no underlying value. The Indian government has yet to lay out its position on cryptocurrency regulation. However, this week, the Department of Economy of the Ministry of Finance of India announced that it will soon publish a document relating to private cryptocurrencies for public consultation.
Speaking at a conference organized by the International Monetary Fund (IMF), T Rabi Sankar said that the central bank has begun to work the introduction of its own digital currency. The digital Indian rupee will provide better management of fiat currency, reduce the risks of non-settlement, and speed up interbank and international payments, making them much cheaper, Sankar said.
He added that the RBI is taking a “measured” approach to implementing the digital rupee so that it does not have a negative impact on the banking system, and commercial banks continue to attract cash deposits, while maintaining their participation in the country’s monetary policy.
“First, it is necessary to complete the verification of the concept of the digital rupee, organize pilot projects to test it, and then gradually introduce it into real life. We intend to learn from our own mistakes, and we understand that this digital journey can last indefinitely. However, under the leadership of the government and regulators with the right vision of how to implement this project, it is possible to work more effectively for the benefit of society. Central bank digital currencies could eliminate the need for bitcoin and other cryptocurrencies,” Sankar said.
The deputy governor of the RBI expressed bewilderment that some central banks are ready to justify the use of stablecoins pegged to state currencies. According to Sankar, their “unquestioning admission” seems strange given the recent situation with the algorithmic UST stablecoin. Many now understand the difference between money and stablecoins, he said. Sankar also appealed to the IMF to clarify the rules for the use of state stablecoins and private digital currencies in payment systems.
Earlier, Indian Finance Minister Nirmala Sitharaman (Nirmala Sitharaman) said that the launch of the digital rupee could take place by the end of this year or early next year.
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