RBI Board discusses private cryptocurrencies, CBDC

The government has proposed to bring in legislation on cryptocurrencies. It has listed Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, for consideration in the ongoing Winter Session of Parliament.

However, sources said that it may not be taken up during the session scheduled to end next week. The RBI in a statement said the 592nd meeting of the Central Board of Directors of Reserve Bank of India was held at Lucknow under the Chairmanship of Governor Shaktikanta Das. “The Board also discussed various aspects relating to Central Bank Digital Currency and Private Crypto Currencies,” it said.

Parliament was recently informed that the government had received a proposal from the RBI in October 2021 for the amendment to the Reserve Bank of India Act, 1934 to enhance the scope of the definition of ‘bank note’ to include currency in digital form.

The RBI has been examining use cases and working out a phased implementation strategy for the introduction of Central Bank Digital Currency (CBDC) with little or no disruption. CBDC is introduced by a central bank. The central bank has repeatedly expressed its strong views against cryptocurrencies, saying they pose serious threats to the macroeconomic and financial stability of the country, and also doubted the number of investors trading on them and their claimed market value.

Governor Das too had reiterated his views against allowing cryptocurrencies, saying they are serious threats to any financial system since they are unregulated by central banks.

The RBI statement further said the Board also reviewed the current domestic and global economic situation, evolving challenges and remedial measures. The Board also discussed the half-yearly income statement of the RBI for the half-year ended September 30, 2021.

“The Board also discussed various areas of operations of the Reserve Bank including the functioning of the Local Boards, activities of select Central Office Departments and the draft Report on Trend and Progress of Banking in India, 2020-21,” the central bank added. Deputy Governors Mahesh Kumar Jain, Michael Debabrata Patra, M Rajeshwar Rao, and T Rabi Sankar were present in the meeting.

Other directors of the Central Board Satish K Marathe, S Gurumurthy, Revathy Iyer and Sachin Chaturvedi attended the meeting. Debasish Panda, Secretary, Department of Financial Services also participated.