The RBI wants a total ban on cryptocurrencies saying partial restrictions will not work. The central bank pointed out the trackability of transactions, extreme price volatility, legal issues, and valuation of cryptocurrencies as concerns.
Revathy Iyer, RBI board member, former deputy comptroller, and auditor general, believe they need to tread with caution. Another board member Sachin Chaturvedi urged policymakers against taking extreme decisions as it would cut off India from the rest of the world.
It should be noted that the RBI has been adamant about a straight-out ban of cryptocurrency in the country. The central bank had to retract its 2018 decision to ban cryptocurrency because of an order by the Supreme Court.
Shaktikanta Das, RBI Governor, called for deeper discussions on cryptocurrency. He said the central bank has concerns about digital assets in terms of macroeconomic and financial stability. And there is more to this than what meets the eye. Das said there was a need for discussions.
In the first week of December, the governor raised concerns about the CBDC falling to digital or cyber frauds and scams. Das said they have to be very much cautious and enhance cyber security. He acknowledged that once the RBI comes up with the CBDCs, fraud would be imminent. As such, the central bank head emphasized the need for a robust system.
T Rabi Sankar, RBI deputy governor, said they are working on two kinds of CBDC – one based on wholesale account and the other is retail-based. The central bank will release the CBDCs on a pilot basis as soon as it’s ready. However, no time frame was given.