Cryptocurrency may lead to ‘dollarisation’ of the economy, may not be good for India: RBI

Top officials of the Reserve Bank of India (RBI) have said that cryptocurrencies could lead to dollarization of a section of the economy, which would be against India’s sovereign interests.

Top officials of the Reserve Bank of India (RBI) have said that cryptocurrencies could lead to dollarization of a section of the economy, which would be against India’s sovereign interests. Top officials, including Reserve Bank Governor Shaktikanta Das, have spoken before the Parliamentary Standing Committee headed by former Minister of State for Finance Jayant Sinha.

reserve Bank of India (RBI) Top officials of the U.S. have told a parliamentary committee that cryptocurrencies (cryptocurrency) economy from (economy) There could be dollarization of a part of the country, which would be against the sovereign interests of India. Sources told PTI that the Reserve Bank of India was in front of the Parliamentary Standing Committee on Finance headed by former Minister of State for Finance Jayant Sinha. (Reserve Bank) Top officials including Governor Shaktikanta Das have spoken. He made them aware of his apprehensions regarding cryptocurrencies and said that it would pose challenges to the stability of the financial system.

According to a member of the committee, RBI officials said this would seriously undermine the central bank’s ability to set monetary policy and regulate the country’s monetary system.

Cryptocurrency can become a medium of transaction: Central Bank

RBI officials said cryptocurrencies have the potential to become a medium of exchange and can replace the rupee in financial transactions both domestically and cross-border. Central bank officials said the currency could occupy a part of the monetary system and could also undermine the RBI’s ability to regulate the flow of money in the system.

Reserve Bank officials warned that cryptocurrencies can also be used for terror financing, money laundering and drug trafficking, and not only this, it can become a major threat to the stability of the country’s financial system. He told the parliamentary committee that almost all cryptocurrencies are dollar-based and issued by foreign private institutions. In such a situation, it is possible that this may lead to dollarization of some part of our economy, which will be against the sovereign interests of the country.

RBI officials said that cryptocurrencies will also have a negative impact on the banking system, as being lucrative assets, people may invest their hard earned money in them, resulting in lack of resources with banks to lend. In this year’s budget, Finance Minister Nirmala Sitharaman had announced a 30 percent tax on trading in cryptocurrencies and related assets. According to an estimate, the number of people investing in crypto in the country is between 15 million and 20 million, who have about $5.34 billion in cryptocurrency.

There is no official data available about the size of the crypto market in India. This parliamentary committee is holding extensive consultations with the finance regulators.

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