Last year, in the month of November-December, the Winter Session of Parliament took place when the government had worked on planning to issue a bill on cryptocurrencies like Bitcoin which however later did not get introduced. Deputy Governor Michael Patra of the Reserve Bank of Australia recently stated that central bank RBI’s opinions about cryptocurrencies may have delayed the government’s proposed legislation on crypto assets. 

In the Budget speech, Finance Minister Nirmala Sitharaman declared that Central Bank Digital Currency (CBDC) will be introduced in FY23. Supporting the declaration, Patra said there are certain concerns related to privacy, its impact on monetary policy formulation, and energy intensity. Hence the government of India will gradually proceed towards introducing crypto law. According to the central bank, speculative assets should be completely prohibited, as they have no underlying value and pose a financial stability threat. For CBDC, Patra highlighted that at a wholesale level such an instrument already exists but still a lot of work needs to be done at the retail level.

Patra speaking at an event organized by the Pune International Centre said “The RBI’s stance on cryptocurrency is well-known. I believe that is one of the viewpoints that has caused a bill on that issue to be postponed, but we will engage in a fair debate on that subject and look at both sides of the debate,”.

Former RBI Governor D Subbarao raised concerns a few weeks ago regarding privacy on the CBDC. The ability to check the entire movement of a single unit of a digital currency makes it vulnerable to oversight and illustrates the absence of data protection laws. He said data protection laws are credible to people within and outside the country. “In a country like India where the opposition is very vigorous, there can be fake complaints, or there can be (a) government misusing the data and covering it up. So, I can see a lot of political complications coming out of this,” the former governor had said.

Indrani bose

CBW - External Analyst

INDIA