The introduction of a Central Bank Digital Currency (CBDC) will not lead to the elimination of cryptocurrencies and stablecoins as they satisfy different objectives, Chief Economic Adviser V. Anantha Nageswaran said on April 7.
"Will CBDC effectively end even cryptos, let alone stablecoins? My answer is no to both of that because the underlying objective for cryptos to emerge is...basically, its about tax evasion, money laundering, and speculation. And CBDC is clearly not a vehicle for evasion and speculation," he said.
"And therefore, in the presence of CBDCs, neither stablecoins nor cryptos would actually disappear because they satisfy different objectives. Therefore, they have to be tackled separately with other regulatory instruments. The advent of CBDC will not obviate the need for regulatory instruments as well," according to the adviser.
Nageswaran was speaking at a webinar organised by the Indian Council for Research on International Economic Relations, 'Getting Central Bank Digital Currency (CBDC) Right for India: Lessons from G20 and the Rest of the World'.
While the Centre is working on firming up its stance on private cryptocurrencies, the Reserve Bank of India (RBI) has clearly stated its opposition to cryptocurrencies. Meanwhile, the central bank is working on its own CBDC, which may be launched sometime this year.
Speaking further on the speed with which central banks, including the RBI, have been working on their digital currencies, Nageswaran said the momentum was partly driven by "group dynamics".
"As (RBI Deputy Governor T. Rabi Sankar) Rabi Sankar put it, there is very little actual evidence and actual experience to be able to fine tune and launch (a CBDC). Right now, there is also a feeling - if I may say so - that we shouldn't be left behind in this because if we are kind of left behind, we might be considered somewhat technologically backward," Nageswaran said.
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