The Governor of the Reserve Bank of India has said he has “no doubt” that digital currencies will play a role in India's future society. Drawing a comparison between the rise of debit and credit cards in the country, the Governor argues digital currency will help pave the way to a cashless society.
Speaking during a wide-ranging TV interview in New Delhi, Reserve Bank Governor Raghuram Rajan made his first comments on Bitcoin and the world of digital currencies yesterday mixing both caution around the issues of price instability, and previous examples of coin theft, with optimism about the future implementation of digital currencies in society.
Rajan explained he believes India will adopt digital currencies “at some point,” but mixed this optimism with cautionary words about Bitcoin's current price instability, vulnerability to theft, and concern at some “worrisome” underlying technologies behind the digital currency. Comparing the idea of Bitcoin to the similar rise of debit and credit cards India is seeing, he explained that he has “no doubt that down the line we will be moving towards primarily a cashless society, and we will have some kinds of currencies like this which will be at work.”
Although Rajan was keen to offset his longer-term belief in the rise of digital currencies with the current problems facing Bitcoin, his comments place him in a small number of global financial leaders who are beginning to warm to the possibilities that these new forms of currency can represent. The Bank of England also issued a report earlier this year that called the Blockchain system “a genuine technological innovation which demonstrates that digital records can be held securely without any central authority,” but again mixed this interest with concerns about market volatility and vulnerability.
For the Indian Reserve Bank Governor, his off-the-cuff discussion of Bitcoin, prompted by an audience member, seems to demonstrate a genuine interest in the digital currency world. Rajan's views summed up Bitcoin as a technology in a state of development, explaining his belief that “these digital currencies will certainly get much better, much safer, and over time will be the form of transaction” and it was on the basis of that continued improvement that he included the idea that “India will adopt them at some point.”
The Indian Reserve bank itself previously washed it hands of digital currencies as back in 2013 it declared that all domestic Bitcoin exchanges were not only “unregulated” but would remain that way. The Bank's alternative protection for consumers was instead to warn the public not to invest in digital currency due to the perceived risk of losing their money.
Analyst Tone Vays however told Cointelegraph that India may now be seeking to “promote a system where people are allowed to use bitcoin […] but ONLY through a government approved intermediary like Coinbase or Circle.
“This way they can maximize the tax revenue (cash is […] becoming a major problem for broke government at all levels) and also have the ability to have those companies shut down accounts,” he continued.
This increasing governmental and regulatory interest in Bitcoin seen in recent months looks set to polarize the states involved. Whilst Rajan made his softly encouraging comments in India, the domestic debates about digital currencies in Russia and Australia have continued to move in a more destructive direction. Under Putin's direction, the Russian state has continued to edge closer to outlawing all “currency alternatives” in a bid to protect the value of Ruble. Australia has likewise also recently issued directives that look set to “double tax” Bitcoin purchases and payments in the country, a policy sure to dampen interest from merchants looking to take digital currency payments.
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