Comments
RBI Governor Raghuram Rajan on Wednesday said the central bank is currently trying to understand virtual currencies and will come out with a more considered view on it. Speaking at the Nasscom India Leadership Forum, Rajan said the RBI has put out an advisory explaining some of the pitfalls that investors or users of bitcoins should be aware of without in any way saying anything about the apex bank’s future course of action.
In December, the RBI had cautioned users, holders and traders of virtual currencies about potential financial, operational, legal and security-related risks they are exposing themselves to.
The Government on Tuesday said creation, trading or usage of virtual currencies as a medium of payment are not authorised by any central bank or monetary authority.
Finance Minister P Chidambaram, in a written statement in the Rajya Sabha, said the RBI is examining the legal and security aspects of virtual currencies, such as bitcoins or litecoins, under the extant legal and regulatory framework of the country, including foreign exchange and payment systems, laws and regulations.
According to Rajan, “One of the values of a currency is some stability. And to the extent that a currency is a target of speculation, as opposed to primary means of exchange, it does create some concerns for the user.” He further said, “I do think that we have to understand the role of virtual currencies and how they will interact with paper currencies that you have. Who gets the benefit of seignorage, that’s an important question for Governments. Also, who will maintain the value? Can we have confidence in an unseen, unknown centre which will maintain the value of the currency or an algorithm which will maintain the value of the currency?” he asked “I don’t want to say that there is no future for these virtual currencies. It is a process of evolution. But for now all we have done is express the kinds of concerns we have about it without determining in any which way what we intend to do,” Rajan added.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.