Mumbai: The Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday reiterated the central bank’s stance on banning crypto currencies even as the US Securities and Exchange Commission approved changes to allow
the creation of bitcoin exchange traded fund in the United States.
Das said that the central bank will not emulate others on crypto currency regulations and that "what is good for another market need not be good for us".
“The RBI's position on cryptocurrency remains unchanged. Travelling down that path will create huge risks. I don't think the world or emerging markets (EMs) can take a crypto mania like the Tulip mania,”
Das said at a media event.
Since last several years, Das and the other RBI deputy governors have been warning about the havoc that cryptocurrencies can play in destabilising the banking system and have advocated for banning them.
To a query on the Central Bank Digital Currency (CBDC), which is RBI's answer to the private digital currencies, Das said, RBI is working on the programmability of the digital rupee so that it can be used for
specific payments like government subsidies and or cash payouts.
“We are expanding wholesale CBDC and exploring the potential for programmable features in retail CBDC to enable senders to define specific end uses," he said.
He also praised the participation of private companies in making India a world leader in the UPI payment system and dismissed criticism that the success of UPI has made its creator NPCI a monopoly. UPI is already operational in some countries, including Singapore and the UAE. Its monthly volume in the country crossed the 100-billion mark many months ago. RBI is in discussion with more central banks in other countries.
"UPI has already become a digital public infrastructure. In fact it has to grow even further. I would say this is the best payments system in the world as of now and I wish it becomes the world leader in it," he said adding that the RBI is not averse to having a rival to NPCI, and in fact it had sought applications for the same. But, none of the
proposals that have come to them so far have had anything new to offer.
The governor also warned about banks relying on algorithms and artificial intelligence to assess customers for loans. Model based, algorithm lending can “lead to a potential crisis,” Das said in a speech at the event. Banks and non-bank financial companies “must appraise robustness of models used for lending,” he said.
