The Reserve Bank of India (RBI) logo is displayed outside the central bank in Mumbai, India
Courtesy: Kanishka Sonthali

RBI internal members not in favor of private cryptocurrencies

The board of the Reserve Bank of India (RBI) addressed several aspects related to the central bank digital currency (CBDC) and private cryptocurrencies on Friday, according to a statement. Governor Shaktikanta Das presided over the 592nd meeting of the Central Board of Directors, which was hosted in Lucknow.

The Reserve Bank of India (RBI) logo is displayed outside the central bank in Mumbai, India
Courtesy: Kanishka Sonthali

The discussions on the topic come at a time when the government is planning to implement cryptocurrency legislation, despite the fact that the central bank remains skeptical of private cryptocurrency. The meeting was not described in detail in the RBI statement.

Meanwhile, reports have surfaced citing sources, that internal central bank members are not in favor to support private cryptocurrencies, and the majority of board members expressed concerns during the meeting. The meeting was attended by deputy governors Mahesh Kumar Jain, Michael Debabrata Patra, T. Rabi Sankar, M. Rajeshwar Rao, and other Central Board directors Satish K. Marathe, Revathy Iyer, S. Gurumurthy, and Sachin Chaturvedi.

The government had planned to propose a bill regulating cryptocurrencies during the winter session, but that may now be pushed back, according to recent media reports. The Finance Minister stated that the bill would be presented in the House after Cabinet approval. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, was scheduled for introduction in the parliament during the ongoing winter session.

Finance Minister Smt. Nirmala Sitharaman recently stated that a ‘well-consulted’ bill is on its way and will be presented in parliament if approved by the cabinet. The bill also aims to create a framework to facilitate the adoption of the RBI’s official digital currency.

According to PTI, FM Sitharaman recently informed the Lok Sabha that there is no plan to recognize Bitcoin as a currency. In a separate statement, Pankaj Chaudhary, Minister of State for Finance stated that the government received a proposal from the RBI in October to amend the Reserve Bank of India Act, 1934 and widen the definition of “banknote” to include currency in electronic form.

The central bank has already been working on the phased implementation of a CBDC. However, it has previously expressed concerns about private cryptocurrencies. Last month, Das highlighted that cryptocurrencies are a major source of concern in terms of macroeconomic and financial stability.

A CBDC is a sovereign currency in digital form that would appear as a liability (currency in circulation) on a central bank’s balance sheet. According to a 2021 survey conducted by the Bank for International Settlements, 86 percent of central banks were proactively researching the possible outcomes for CBDCs, 60 percent were experimenting with the technology, and 14 percent were launching pilot programs.