The government of India fears cryptocurrencies since they can destabilise the Rupee. Especially if India accept bitcoin and other digital currencies as money, according to Quartz.
Why does India fear cryptocurrencies?
Cryptocurrencies can impact major economies around the world. Venezuela is an example that currently suffers from hyperinflation. Its inhabitants turn to bitcoin and other digital assets for a haven. India fears digital assets as well. A panel, created by the Indian ministry of finance’s economic affairs secretary, Subhash Chandra Garg issued a warning regarding digital assets. The panel is afraid over the impact cryptos could have on the rupee if they are allowed for making payments.
“If bitcoin and other digital currencies are going to be used for payments, then whether it will end up destabilising the fiat currency is a major concern for them (the Garg panel),” said one of the representatives from the cryptocurrency ecosystem who recently met the ministers. “The overall impact on the financial ecosystem that it is likely to have is still unclear. It is a challenge to convince them on this particular point.”
The fear might come from a report, released by the Bank for International Settlements (BUIS) last March. BIS is a club of sorts for the world’s central banks. It is usually concerned about matters like the stability of the global financial system. Along with 59 other central banks, the Reserve Bank of India (RBI) is a member of the BIS.
The report stated that virtual currencies could one day be issued by policymakers for settling payments among financial institutions. However, it had also warned that digital coins might destabilise traditional banks if they are offered widely to the general public.
Will cryptocurrencies become money?
The Indian government stated that it does not recognise these digital assets as legal tender and is unlikely to do so. They stated:
“You can’t buy goods and services in India using any other currency such as the dollar, pound or even gold and it needs to be converted first into rupee to complete payments. We have the same stance when it comes to cryptocurrencies.”
The Indian banks even require customers to sign contracts, promising not to use cryptocurrencies. However, in some countries, the “threat” is real since countries recognise bitcoin as money already. The American state of Wyoming is one of the first states in the US that does just that. However, countries already use bitcoin and other cryptocurrencies all over the world. For example, Tobacco shops in France sell bitcoin already and Venezuela’s shopping malls, Traki, accepts bitcoin.
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