Posted 2 years ago | by Ben Armstrong
Top Indian Central Banker See no Future for Digital Money Monopoly
A monopoly architecture shouldn’t be included in the future strategy of both private digital currencies and central bank digital currencies, according to Raghuram Rajan, a former governor of the IMF.
In a recent statement Rajan, who is also a former chief of the Reserve Bank of India (RBI) said that private cryptocurrencies such as Facebook’s Libra or Bitcoin (BTC) may keep their positions even when central banks launch their own Central Bank Digital Currencies (CBDCs).
He also thinks that a monopoly shouldn’t be targeted in any strategic plan.
In an interview with CNBC, Rajan, also Chief Economist and Research Director for the International Monetary Fund from 2003-2006, said holding a monopoly in place can be very risky.
He believes, however, that other private digital currencies will play different roles and compete strongly with existing currencies.
Bitcoin Could be a Golden Asset
In future, Bitcoin's role would mainly serve as an asset for value storage – or a speculative asset rather than a medium of exchange. The former Central Banker considers Bitcoin as, “a piece of gold.”
Libra may be useful in daily transactions, but there are a tremendous number of other digital assets that can compete in this area. Rajan also raised concerns about CBDC projects, targeting the privacy and trust of a nations citizens.
In other words, the use of CBDCs requires personal information sharing and it may provoke uncomfortable situations among people. Therefore, banks need to be clear about how they would want to use that great deal of information and which data they should collect.
Keeping the Market Open
Private digital currencies may be problematic when a, “monopoly central bank digital currency without safeguards on the central banks use and management of the currency and the data that accompanies it.”
Instead of attempting to create monopolies, having competition and interactions between participants in the same market can produce different benefits for both private as well as central bank digital currencies.
Even though it’s important to overcome obstacles in the digital currency industry, Rajan wants to see private digital currencies and central bank digital currencies exist side by side, and to see what brings more value to users.
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