“Furthermore, the wide spread of cryptocurrencies has the potential to undermine the power of monetary authorities to determine and regulate monetary policy and a country’s monetary system, which could pose a serious challenge to the stability of the country’s financial system.
The central bank has consistently expressed its opposition to private cryptocurrencies and the RBI governor Shaktikanta Daso Said in June that cryptocurrencies are a clear threat and that anything that acquires value on a make-believe basis without any underlying value is just speculation under a sophisticated name.
Authorities are working on measures to regulate cryptocurrencies, but the idea has been that global cooperation is needed to regulate these entities as measures taken by one country will not be enough to regulate them. The issue may come up in next year’s G20 deliberations chaired by India.
“The underlying design of cryptocurrencies is more efficient to bypass established and regulated arbitrage and control regimes that play a vital role in ensuring the integrity and stability of the monetary and financial ecosystem,” the RBI note issued on Friday said.
It said that CBDCs are the next step in the evolutionary progress of a sovereign currency. referred to as E (digital RupeeIn India, it is not much different from banknotes, but it is likely to be easier, faster and cheaper as it goes digital. According to the central bank, it also has all the transactional benefits of other forms of digital currency.
RBI will soon start a limited pilot launch of E for specific use.