India’s central bank has revealed research into cryptocurrencies as it looks toward a digital alternative to the fiat rupee in the future.
It has been little over a year since the ruling Indian government at the center enforced a comprehensive ban on physical cash, leaving nearly 90% of India’s currency notes obsolete overnight. The government has since announced the “Cashless India” initiative to help the country’s population embrace digital payments, banking and finance with a conscious move away from cash.
As CCN reported in January this year, a whitepaper published by the research arm of the Reserve Bank of India (RBI), India’s central bank, determined that blockchain technology had “matured enough” to support the digitization of the Indian rupee, the country’s fiat currency.
Speculation toward such developments have now been confirmed by a senior RBI official. Speaking at a FinTech conference, RBI executive director Sudarshan Sen stated in quotes reported by the Economic Times:
Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closely.
However, the central bank isn’t particularly keen, with non-fiat cryptocurrencies like bitcoin. “As regards to non-fiat cryptocurrencies, I think we are not comfortable,” Sen stated. “Bitcoins for example. That’s a private cryptocurrency.”
The RBI has issued public notices in the past, warning citizens and investors about the use or adoption of bitcoin in the country. In a statement in March this year, the RBI stated it hadn’t authorized or licensed any company to operate with bitcoin or any other virtual currency. The public caution was essentially a rehash of a similar statement from December 2013.
However, the significant growth of India’s bitcoin industry has compelled the country’s finance ministry to establish an intergovernmental digital currency committee tasked to study and propose a regulatory framework for the legality of cryptocurrencies in India.