Ex-RBI Governor Says Crypto Could Snatch Central Bank’s Control on Money Supply, Inflation Management

Duvvuri Subbarao believes the role of the central bank as the last-resort lender should not be hampered with legalisation of cryptocurrencies.

By Radhika Parashar | Updated: 9 December 2021 19:12 IST

Ex-RBI Governor Says Crypto Could Snatch Central Bank’s Control on Money Supply, Inflation Management

Crypto trading, holding, and advertising have not been officially banned in India yet

Highlights

Duvvuri Subbarao served as RBI governor from 2008 to 2013
He was speaking about crypto legalisation at an online webinar
Subbarao is not in favour of India legalising cryptocurrencies

At a time when India is planning to regulate the crypto space, Duvvuri Subbarao, the former governor of the Reserve Bank of India (RBI) has expressed his concerns regarding cryptocurrencies. Subbarao fears that if legalised, cryptocurrencies can rob the central bank of its control on money supply and inflation management in the country. Subbarao shared his assessment while addressing a webinar organised by the National Stock Exchange (NSE) and New York University (NYU) Stern School of Business this week.

"There are also concerns that crypto will disrupt the monetary policy," the former RBI chief who held the position from 2008 to 2013 reportedly said.

Despite India considering the launch of a national central bank digital currency (CBDC), Subbarao believes that the move could also backfire due to lack of advanced data protection laws.

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Moreover, Subbarao said that the role of the central bank being the last-resort lender should not be hampered with the legaisation of cryptocurrencies in India.

The development comes amid India's plan of banning all private cryptocurrencies from operating in the country was listed as an agenda to be discussed in the ongoing winter session of the Parliament last month.

The proposed legislation also seeks to make those who infringe the law subject to be arrested without a warrant and being held without bail along with being liable to pay hefty fines.

The bill will be presented before the Indian parliament after it gets approvals from the Cabinet.

Multiple studies by research firms like Statista, Hootsuite, and TripleA claim that — India is home to over 100 million crypto holders.

Not just in India, the crypto space has witnessed support and adoption in other parts of the world as well.

In October, the Bank of America released a report saying that "cryptocurrencies have become too large to ignore".

BofA's research had also revealed that mergers and acquisitions in the crypto space have spiked from $940 million (roughly Rs. 7,025 crores) in 2020 to $4.2 billion (Rs. 31,390 crores) in 2021.

In a message to governments around the world, earlier in October, Tesla CEO Elon Musk has said that while the advancement of cryptocurrencies can be slowed down, these digital assets cannot be destroyed now.

Leaders of several nations, however, including Russian President Vladimir Putin are concerned with the high volatility in the crypto space.

Interested in cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

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Further reading: Cryptocurrency, RBI, Duvvuri Subbarao

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More