Crypto could lead to dollarisation of economy: RBI
Reserve Bank of India officials stated that cryptocurrencies could be a threat to the central bank’s monetary policy and a threat to sovereign interest
By Shashank Bhardwaj
Reserve Bank of India (RBI) officials told a parliamentary committee on Finance that cryptocurrencies can result in a part of the Indian economy becoming dollarised. They further stated that the decentralised currencies could also undermine RBIs capacity to regulate the flow of money and harm sovereign interest. The Parliamentary Standing Committee on Finance was chaired by the former minister of state for finance, Jayant Sinha.
According to a Press Trust of India report, the officials believed that cryptocurrencies had the potential as a medium of exchange and to replace the Indian rupee in both domestic and international financial transactions. One of the RBI officials said, It will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country. It could replace a part of the monetary system undermining RBI’s capacity to regulate the flow of money in the system.
RBIs governor, Shaktikanta Das, also expressed his apprehensions on how cryptocurrencies could be a threat to the stability of the financial system. The officials reiterated the RBI stance saying that cryptocurrencies should be banned.