An Indian government committee is fearful about the future of the rupee if Bitcoin continues to be adopted as an online payment method.
According to a report by local English-speaking media outlet Quartz, the committee is led by Indian Economic Affairs Secretary and former Executive Director at the World Bank Subhash Chandra Garg.
“If Bitcoin and other digital currencies are going to be allowed to be used for payments, then whether it will end up destabilising the fiat currency is a major concern for them (the Garg panel),” said an unnamed representative from the cryptocurrency ecosystem who recently met the ministers, as quoted by Quartz.
“The overall impact on the financial ecosystem that it is likely to have is still unclear, and it has been a challenge to convince them on this particular point.”
The comments are reinforced by a recent report from the Bank of International Settlements, which states that digital currencies may eventually be used by institutions and policymakers, before going on to predict that digital currencies may destabilise traditional banks if they are offered to the public.
With fintech banks like Revolut and Monzo seemingly on the rise in the UK and Europe, it seems as though there is a demand away from the traditional banking systems, which has prompted further concern from the likes of India who rely on their banking sector to bolster their economy.
However, founder of Indian-based exchange Koinex, Rahul Raj, believes that the concerns of the government are premature.
“At this point, it may be a bit premature to worry about this, as right now even globally only a handful of payments are made using virtual currencies, and that will be the case until blockchain reaches the scale that say MasterCard or Visa have,” said Rahul Raj.
“Therefore, there is considerable time before that concern even comes up.”
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.