Expressing concern over usage of cryptocurrencies, Finance Minister Nirmala Sitharaman on Sunday said that many countries have cautioned against rushing into cryptocurrencies.
The finance minister was speaking in Washington, while attending the annual meeting of the International Monetary Fund and the World Bank, where Facebook’s proposed virtual currency Libra was a matter of discussion.
“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.. countries will have to show extreme caution much before anything is said or moved on this,” Sitharaman told a group of Indian reporters in response to a question over the discussions on Libra.
Meanwhile, the Reserve Bank of India (RBI) has banned the use of cryptocurrencies in the country. “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 stable currency, it should relate to virtual currency or something of the kind,” she said.
In June, Facebook announced that it would spearhead the launch of a cryptocurrency run by non-profit Switzerland-based Libra Association in 2020. Libra is a so-called “stable coin”, meaning its value is tied to that of underlying fiat currency such as the dollar. “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,” she said.
After Facebook and China’s announcement of its proposed digital currency, global leaders are already concerned that cryptocurrency would add to a long list of existing tensions between the global superpowers, especially currency manipulation.
Kristalina Georgieva, MD, IMF said the organisation has been engaged quite extensively with others, like Financial Stability Board, European Central Bank, on the question of digital currency, stable coins about what are the benefits and risks involved, adding that digital currency can be abused for illegal purposes.