Cryptocurrency Will ‘Dollarize’ Indian Economy? Top Indian Reserve Bank Officials Are Warning About The Dangers Of Crypto
Cryptocurrencies will ‘dollarize’ the Indian economy?
Cryptocurrencies have the potential to dollarize a portion of the economy, which would be harmful to India’s sovereignty. According to sources, top Reserve Bank of India (RBI) officials warned at a parliamentary panel.
Top RBI officials, including governor Shaktikanta Das, spoke to the Parliamentary Standing Committee on Finance, which is chaired by former minister of state for finance Jayant Sinha. They expressed their concerns about cryptocurrencies and said they pose a threat to the financial system’s stability.
“It will seriously undermine the RBI’s capacity to determine monetary policy and regulate the monetary system of the country,” a member of the panel quoted RBI officials as saying.
Central bank officials noted that cryptocurrencies have the potential to be a medium of exchange and to replace the rupee in financial transactions, both domestic and cross-border, and that these currencies “can replace a part of the monetary system,” but that they “will also undermine the RBI’s capacity to regulate the flow of money in the system.”
The central bank officials warned that cryptos, in addition to being used for terror financing, money laundering, and drug trafficking, represent a significant threat to the country’s financial system’s stability.
“Almost all cryptocurrencies are dollar-denominated and issued by foreign private entities, it may eventually lead to dollarization of a part of our economy which will be against the country’s sovereign interest,” the officials told the members.
When asked about the effects of cryptocurrency, RBI officials stated it will have a severe influence on the financial system because individuals may put their hard-earned savings in digital currencies, resulting in banks having less resources to lend.
The Indian Finance Bill 2022 with new 30% crypto tax rules was approved by the Rajya Sabha, the upper house of the Indian parliament, to make it a law today that will come into effect in the country starting on April 1.
The Finance Bill was introduced during the budget session 2022-23 of the parliament in January. The Finance Bill amended tax rules to impose a 30% crypto tax on digital asset holdings and transfers. Apart from that, traders cannot offset their losses against profits and each trading pair will be considered independently for the tax deduction.
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