In a concept paper on central bank digital currency (CBDC), the Reserve Bank of India (RBI) identified concerns presented by private cryptocurrencies, stating that these digital assets threaten India’s financial and macroeconomic stability due to their detrimental effects on the financial system.
“Furthermore, a greater prevalence of cryptocurrencies has the potential to undermine the authority of monetary authorities to formulate and control monetary policy and the monetary system of the nation, which might represent a significant threat to the stability of the country’s financial system.
Authorities are working on steps to control cryptocurrencies, but it is believed that global collaboration is required to properly govern these entities since actions implemented by a single nation would be insufficient. The matter might be discussed during India’s chairmanship of the G20 the following year.
“The intrinsic nature of cryptocurrencies is more oriented toward avoiding the existing and regulated intermediation and control mechanisms that play a critical role in safeguarding the integrity and stability of the monetary and financial ecosystem,” the RBI said in a note published on Friday.
It was said that CBDCs represent the next phase in the development of the sovereign currency. Termed known as e (digital Rupee) in India, it is essentially identical to banknotes, but being a digital currency, it is expected to be simpler, quicker, and less expensive. RBI will shortly initiate restricted test launches of certain applications.