Key Takeaways:
- Crypto poses a greater threat to India’s financial stability than the country’s currency says RBI.
- Hyperinflationary countries have become dollarised with dollars accounting for more than 80 percent of their economy.
- The committee was chaired by Jayant Sinha who is the former state minister of finance.
According to the sources of a local newspaper, the RBI officials have stated that the cryptocurrency or the digital assets have the extreme ability to basically dollarize a portion of the economy. They informed the committee that this would be damaging to India’s sovereignty. The committee was chaired by Jayant Sinha who is the former state minister of finance.
The officials also stated that they believe that cryptos, in addition to being used for terrorist financing, money laundering, and drug trafficking, constitute a larger threat to India’s financial stability than the currency.
“It will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country,” a member of the panel quoted RBI officials as saying.
Hyperinflationary countries have become dollarised with dollars accounting for more than 80 percent of the currency in circulation. Although the US contributes for only 5percent of Indian imports and 15percent of its exports, it accounts for up to 86 percent of Indian imports and exports.
Hyperinflationary Countries are basically the countries that have expected three-year cumulative inflation rates between 70 percent and 100percent, or with a reasonable increase in inflation over the current period.
Hyperinflation is identified by low or no value fiat currency. However, it’s not the case with traditional money. Digital currencies cannot be increased at will. Crypto transactions take place on a decentralized and distributed public ledger.
Discussing further on it they said the cryptocurrency will make the financial system will suffer. There are an estimated 15 million to 20 million bitcoin investors in India. There are no official figures available on the size of the Indian cryptocurrency market.
