A high-level panel led by Indian government’s Economic Affairs Secretary is reportedly worried that cryptocurrencies may lead to destabilization of Rupees (Indian fiat currency).
India’s Experiments with Cryptocurrencies
Reports say the high-level committee that was set up under the current economic affairs secretary in the ministry of finance, Subhash Chandra Garg, is reportedly exploring the impact of cryptocurrencies on less explored areas. The panel is believed to be exploring the impact of cryptocurrencies on the official Indian fiat currency (Indian Rupee) if they make the former a preferred mode of payment.
A representative belonging to the crypto ecosystem, who reportedly met the ministers and is believed to have firsthand knowledge of what’s happening inside the Indian government regarding cryptos, said:
“If bitcoin and other digital currencies are going to be allowed to be used for payments then whether it will end up destabilising the fiat currency is a major concern for them…The overall impact on the financial ecosystem that it is likely to have is still unclear and it has been a challenge to convince them on this particular point.”
The concerned source also said that the Garg-led panel’s fear of cryptocurrency’s ill effects on fiat currency may have cropped up from a report of Bank for International Settlements (BIS) during March 2018. The concerned report published by the Basel-based BIS had pointed out two major issues:
- In the future, virtual currencies may become a medium among policymakers to settle payments among financial institutions.
- The report also warned that the cryptocurrencies may lead to destabilization of traditional banks if these coins are offered to the general public for use.
Switzerland-based BIS is like a club for all the central banks of the world. This body is generally concerned about the stability of the global financial system. As Indian apex bank (Reserve Bank of India) is a member of BIS along with 59 other central banks, the
Majority of the cryptocurrency ecosystem believes that this apprehension is misplaced and such risks will not crop up in the near future. Indian cryptocurrency exchange Koinex’s founder, Rahul Raj, believes this apprehension to be hyped. He believes that virtual currencies can destabilize Indian Rupee only when the blockchain technology reaches a penetration in the Indian economy similar to that of Mastercard or Visa.
Raj went on to say that Indian government doesn’t allow buy and
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