Bank of India’s deputy governor is acting like King Canute
The Reserve Bank of India (RBI) Deputy Governor’s approach to Bitcoin and cryptocurrencies is jeopardising his country’s future economic prosperity.
T Rabi Sankar on February 14 said banning cryptocurrencies is “perhaps the most advisable choice open to India”.
The lightning pace of the digitalisation of the global economy and our daily lives underscores that there will be a consistently growing demand for digital, global, borderless money moving forward.
Indeed, cryptocurrencies are now almost universally regarded as the future of money.
This is why most major financial institutions globally already have or are preparing to establish crypto operations. It is why more and more household name retail and institutional investors are piling into the market. And it is why tech giants, multinational corporations and prestigious universities, amongst others, are increasing their exposure to crypto.
When everything from voting to shopping, to music, books and art is already digital, dismissing digital currencies in a digital era is depressingly archaic.
The wider point here is regulation. Cryptocurrencies are already becoming mainstream. As such, they should adhere to the same standards as the rest of the financial system.
Regulation is necessary as it will provide further protection for the growing number of people using cryptocurrencies, the less likely it will be that criminals will use these digital payment methods, the less potential risk there will be for the disruption of global financial stability, and the more potential opportunities there will be for higher economic growth and activity in those countries which introduce it.
And it is surely on its way, judging by the activities of serious regulators around the world.
Speaking at the Indian Banks Association 17th Annual Banking Technology Conference and Awards, the Deputy Governor set out different issues to highlight his concerns caused by cryptocurrencies in the financial system. It’s the first time an RBI top official is openly making a call to ban the likes of Bitcoin.
Standing on the sidelines on the issue of cryptocurrencies – which are redefining and reshaping the global financial system – is an unsettling approach for a senior central banker in the world’s largest democracy to take.
Unfortunately, his stance could put India on the backfoot, and it could be hard to catch up in the future – which it will surely have to try and do eventually – with rival economies.
Cryptocurrencies have already changed the way the world handles money, makes transactions, does business, and manages assets.
There’s an air of King Canute, who is said to have attempted to command the tides of the sea to go back, about the RBI Deputy Governor’s speech.