Kolkata: Former Bank of India Governor (RBI) Duvvuri Subbarao said the central bank could lose control of the supply of money and inflation management if Cryptocurrency was allowed in the country.
Speaking at a webinar held by the National Stock Exchange (NSE) and New York University (NYU) Stern School of Business, Rao also said the Indian case to issue a central bank’s digital currency (CBDC) might not be strong because there was capital control.
CryptocurrencyLive “Crypto is supported by the algorithm and there is a fear that the central bank might lose control of the inventory of money and inflation management.
There is also concern that Crypto will disrupt monetary policy,” he said on Wednesday.
“Crypto can jump in capital control; Fiat money is associated with a reserve currency,” he added.
Rao, who served as the Governor of RBI from 2008 to 2013, said the CBDC also needed a strong data protection law.
According to him, cash is traveling in India and digital payments become popular.
However, Rao said because of a pandemic, currency circulation has increased when people adhere to cash due to locking.
“The role of the central bank as the last resort lender may not be hampered.”