Former Governor of the Reserve Bank of India, Raghuram Rajan said private cryptocurrencies like Bitcoin (BTC) and Facebook’s Libra could have a future even if central banks launch their own digital currencies.
Rajan, who was also the chief economist and research director of the International Monetary Fund from 2003 to 2006, said this during a CNBC podcast One of these digital currencies could only become problematic if it had a monopoly.
However, he believes there will be other private digital currencies that will play different roles and will offer strong competition to the existing ones.
The former central banker said that in the future Bitcoin will function primarily as a store of value or a speculative asset rather than a medium of exchange. “Bitcoin is a bit like gold,” he added.
Vice versa, The scale is used for daily transactionsSaid Rajan.
Rajan also expressed concern about banks that issue central bank digital currencies. Said Banks can get a lot of information using CBDC, but users may not be comfortable sharing all of their personal payment information. Banks would have to decide what data to collect and how to use it, he added.
As with private digital currencies, if there is a “central bank digital monopoly currency with no safeguards for the use and management of the currency and associated data”, it will also be a problem.
It will be beneficial to compete for both the central bank and private digital currencies, Rajan said.
Rajan concluded that while there are challenges to be solved in the field of digital currencies, You want private digital currencies to coexist with central bank digital currencies and see what works better.