Indian Finance Minister on Cryptocurrencies: Extreme Caution Before Moving Forward

  • Extreme caution before moving forward: Nirmala Sitharaman
  • Libra is not the focus, Inevitability of expanding digital money is: IMF

Several countries have cautioned against rushing into cryptocurrencies, said Indian Finance Minister Nirmala Sitharaman on Sunday.

“On our side, the Reserve Bank Governor spoke about it during our turn to intervene. I got the sense that many countries were cautioning on rushing into this,”

Sitharaman told a group of Indian reporters in response to a question on Facebook’s Libra, a much talked about topic at the 40th annual meeting of the International Monetary Fund and the World Bank.

Facebook’s cryptocurrency project Libra is facing scrutiny from regulators worldwide. Back in June, Subhash Chandra Garg who has been heading the inter-ministerial committee (IMC), which is drafting the regulatory framework for cryptocurrency, said the country won’t allow Libra as its a private cryptocurrency. She said:

“Some of them (countries) of course even suggested that they shouldn't be using, all of us shouldn't be using the name stable currency because that's the expression they used. Many cautioned to the extent saying even the name should not be a stable currency, it should relate to virtual currency or something of the kind.”

Everyone is stepping cautiously on Cryptos

The overall feeling at the meeting Sitharaman said was that “countries will have to show extreme caution much before anything is said or moved on this.” She added,

“In fact, this morning some of the presentations were also highlighting the strengths of such virtual currency. But equally everyone without fail spoke about the challenges together with talking about it as a necessary step forward. So everyone was stepping cautiously on it.”

Currently, the Indian government is deliberating on crypto policies. Back in July, a draft bill entitled “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” submitted in February to the Ministry of Finance was made public.

The finance minister talked about the IMC report, calling it “a very futuristic and well-thought-out report,” but that she had “not spent time on it.”

No decision has been announced by the government yet but the bill is expected to be introduced in the next session of parliament.

The RBI has prohibited financial institutions from providing services to crypto business, since July last year. The ban has been challenged in the supreme court, with the next hearing expected to be on Nov. 19.

Libra is Not the Focus, Inevitability of Expanding Digital Money is: IMF

At the same event, Kristalina Georgieva, Managing Director of the IMF said the organization is engaged extensively with other organizations on the risks and benefits of digital currencies and risks. She said,

“We take a very balanced approach. We look at the ease of use, cost savings, and most importantly, financial inclusion as very important benefits. But we are also very mindful that they can be a risk for privacy, consumer privacy.”

Georgieva said cryptocurrencies can be abused for illegal purposes and even terrorism financing, issues that need to be “well understood and addressed.”

As for Libra, the IMF Managing Director said,

“We are not specifically focusing on Libra. We are looking into, one, the inevitability of expanding digital money on the wave of the digital revolution, but then the necessity to do so, mindful of monetary stability.”

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