The Reserve Bank of India maintained its hard-line stance on not allowing privately owned cryptocurrencies in India, but said that it would ‘seriously’ consider developing a sovereign digital currency when the time is ‘appropriate’.
It has been reported that by killing the aspirations of several private companies experimenting with digital currencies such as Facebook and JP Morgan Chase, and other blockchain-enabled cryptocurrencies vying for Indian markets, Shaktikanta Das, the Governor of RBI, said that currency issuance is a sovereign mandate which will not be handed over to a private company.
“With regard to digital currency, there are two aspects…RBI is very clearly against any private digital currency just as world over with central banks and governments. Currency issuance is a sovereign function. A private currency cannot override sovereign mandate…there are huge challenges around money laundering.”
However, he admitted that the RBI has held several internal discussions and consulted with other central banks on possibility of launching India’s own digital currency, but said that it would be improbable for any such project to take off in the immediate future, which given the existing level of technology at central bank’s disposal.
Das also said:
“It’s too early when asked about India’s digital currency aspirations at the Monetary Policy Committee press conference. “As and when the technology evolves, with certain safeguards, it is an area the reserve bank will look seriously at an appropriate time. The technology is still evolving and is at an incipient stage.”
Likewise, last month, China became the first country in the world to announce its digital currency. Several other countries including France, Singapore, and Malaysia are also known to be testing similar government-controlled digital currencies.
However, it is to be noted that a government constituted panel headed by Subhash Chandra Garg, the former Finance Secretary, had recommended the government to make cryptocurrency trading in India illegal earlier this year.
Thus, the report pointed out that India could benefit from harnessing blockchain, the underlying technology that powers cryptocurrencies, and come with other use cases including a sovereign controlled digital currency.