Cryptos can lead to dollarisation of economy: RBI

New Delhi: Cryptocurrencies can lead to “dollarisation” of a part of the economy which would be against India’s sovereign interest, top officials of the RBI have told a parliamentary panel.

Briefing the Parliamentary Standing Committee on Finance chaired by former minister of state for finance Jayant Sinha, top officials of the RBI, including its governor Shaktikanta Das, clearly expressed their apprehensions about cryptocurrencies and said these pose challenges to the stability of the financial system, sources said .

“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.

Pointing out that cryptocurrencies have the potential to be a medium of exchange and replace the rupee in financial transactions both domestic and cross border, central bank officials said these currencies “can replace a part of monetary system it will also undermine the RBI’s capacity to regulate the flow of money in the system”.

Cautioning that besides being used for terror financing, money laundering and drug trafficking, cryptos pose a bigger threat to the stability of the financial system of the country, the RBI officials said.

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 country’s sovereign interest, officials told the members. (PTI)