• Officials of the RBI have told a parliamentary panel that cryptocurrencies can lead to “dollarisation” of a part of the economy.
• It will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country.
• In India, there are between 15 million and 20 millions crypto investors.

Top officials of the RBI have told a parliamentary panel that cryptocurrencies can lead to “dollarisation” of a part of the economy which would be against India’s sovereign interest.

Jayant Sinha (ex-minister of Finance) briefed the Parliamentary Standing Committee on Finance. The RBI’s top officers expressed concerns about crypto currencies and warned that this could pose problems for the stability of our financial system.

A member of the panel was quoted saying “it will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country.”

While acknowledging the fact that cryptocurrencies have the potential to become transactional currencies that may replace the rupee, central bank officials still have their doubts and stated that these currencies “can replace a part of the monetary system it will also undermine the RBI’s capacity to regulate the flow of money in the system.”

Officials at central banks claim that cryptocurrencies not only play a role in terrorist financing and money laundering but are also a threat to the stability the country’s financial system.

Although the main concern for banking officials regarding cryptocurrencies is the “dollarisation” of the Indian economy, they also have reservations about what cryptos can do to the banking system of the country.

According to officials from the RBI, cryptocurrencies could have negative consequences for the banking system. People will begin investing in cryptocurrency which can cause the bank to lose money and less ability lend.

At the moment, India has between 15- 20 million crypto investors.

Continue reading on CoinQuora