Reserve Bank of India has warned the parliamentary committee of India over the matter of cryptocurrencies and it said the cryptocurrencies in India can lead to “dollarisation” and it will disturb the financial stability of the Indian Economy.

Highlights

The cryptocurrencies will hurt the banking system, said RBI
At present, India has 15 million to 20 million crypto investors.
Still, no data is available on the size of the Indian crypto market

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Top officials of the Reserve bank of India have released a warning statement about cryptocurrency use and what will be its impact on the Indian Economy. They have been told cryptocurrencies can lead to “dollarisation” of a part of the economy which would be against India’s sovereign interest.

The top officials of the Reserve Bank of India, while briefing the Parliament Standing Committee on Finance which was chaired by the former minister of state for Finance Jayant Sinha (Top Official of RBI) including its governor Shaktikanta Das have clearly expressed their concern which was apprehending about cryptocurrencies and said these pose challenges which will break the stability of the financial system of India.

A member of the panel says “It will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country,” said the panel member.

Pointing toward the use of cryptocurrencies, officials said cryptocurrencies have the potential to be a medium of exchange and replace the rupee in financial transactions both domestic and across borders. Officials also said 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.”

The members were also told by the officials “Almost all the cryptocurrencies are dollar-dominated and issued by the foreign private entities, it may eventually lead to the dollarization of a part of our economy which will be against the country’s sovereign interest.”

At present, no data is available on the size of the Indian crypto market.

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