Sanjiv Bajaj, Chairman and Managing Director, Bajaj Finserv Ltd, has joined the chorus of support for digital currency, stating that there is “clearly a very strong need and a role for digital currency”.
Addressing a virtual session on Fintechs at Microsoft’s flagship event ‘Future Ready’, Bajaj felt that digital currency is an “interesting evolution” and should be monitored. “It should be used in the right manner. And we will hear more in the coming years,” he added in response to a query on his thoughts on the future of digital currency.
RBI monitoring
Bajaj highlighted that adoption of digital currency — issued and monitored by the central bank — can take the economy to the next level. He pointed out that India is so much ahead of the western world in using digital payments. “It (revolution in digital payments) has changed our life in the last couple of years,” he said.
“So when one talks of digital currency, one has to decide whether it should be a currency controlled by central banks that allows trust? Or should it be linked to some kind of a crypto formula, which again, we have to build trust on?,” he said. Bajaj highlighted that cryptocurrencies like Bitcoin and Ethereum have been volatile in the last few years. “And even in the last 12 months, that does make you nervous as an individual holding that currency because everybody is not in it just for the gamble. For most people, it would be to preserve value and to see that value increases based on an underlying set of assets or formula,” he added.
Sovereign currency
He said digital currency can also be own sovereign currency but in a digital avatar. “And as we know, the RBI is working on this, we have to see what they come out with,” he said. Bajaj’s remarks are significant as the RBI is in the process of doing pilot projects on digital currency and there is a move to seriously look at central bank digital currency (CBDC). On its part, the government is yet to make public its stance on introducing sovereign digital currency even as there is still no clarity on how it would legally treat cryptocurrency in the coming days.
Speculation is rife that the government would, in the coming days, look to introduce a law to discourage use of private crypto currency. Bajaj said India is one of the world’s largest recipient of remittances and still in this space these transactions carry very high structural fees and process times.
“And all of this has not evolved with the digital world. Over the past, even I would say 10, 15, 20 years, and that’s where digital currency has made inroads. Forget the dark web and the wrong use of digital currency or cryptocurrency. I’m not talking about that, but even if you were to just think of all the correct reasons, you’re firstly creating a new method to value, and that’s using blockchain as a technology, and I’m not an expert there. So you naturally need central banks to develop trust and know how the underlying algorithms work,” he said.