RBI to study introduction of central bank digital currency
Virtual Currencies (VCs), also variously referred to as crypto currencies and crypto assets, "raise concerns of consumer protection, market integrity and money laundering, among others”, RBI said in a statement.
April 05, 2018 / 04:09 PM IST
Given the rise of online currencies such as bitcoin, RBI today said a group will study the desirability and the feasibility to introduce a central bank digital currency. The report will be submitted by end-June 2018.
However, in view of the associated risks, it has been decided, with immediate effect, that entities regulated by the RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs, the regulator said.
Regulated entities which already provide such services shall exit the relationship within a specified time. A circular in this regard is being issued separately.
Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system.
But the RBI also warned about virtual currencies (VCs), variously referred to as cryptocurrencies and crypto assets, saying they "raise concerns of consumer protection, market integrity and money laundering, among others".
RBI acknowledged the rapid changes in the landscape of the payments industry along with factors such as emergence of private digital tokens and the rising costs of managing fiat paper/metallic money have led central banks around the world to explore the option of introducing fiat digital currencies.
While many central banks are still engaged in the debate, an inter-departmental group has been constituted by the Reserve Bank to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency.
RBI has repeatedly cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies.