26 MAY,2022 | MEDC
Top RBI officials, including the Central Bank Governor, recently told a parliamentary panel that cryptocurrencies can lead to the dollarization of a part of the domestic economy. That may work against India's sovereign interest, by posing potential challenges to the stability of the financial system. This needs to be taken seriously. As it is, inflation is not currently within the RBI's comfort zone, and introducing cryptocurrencies into the financial system at this stage could create avoidable complications. There are an estimated 15 to 20 million crypto investors in India, with total holdings of around $ 5.34 billion. With almost all cryptocurrencies being dollar-denominated and issued by foreign private entities, Indian policymakers need to remain wary of them. Our banking system has not even covered half of its digital transformation journey, and so crypto usage has to be carefully monitored.
*Picture Credit: Google