Former finance secretary Subhash Chandra Garg bats for India’s own digital currency

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Former finance secretary Subhash Chandra Garg has suggested that the Reserve Bank of India (RBI) should speed up the process to launch the central bank digital currency (CBDC). In his keynote address at the BFSI Insight Summit organised by the Business Standard, Garg suggested that the RBI should collaborate with other nations to develop an international digital currency and not let the digital dollar become the world’s digital currency, reported the publication.

According to the report, the former finance secretary said that digital currencies are indeed the future while raising doubts about the relevance of the private cryptocurrencies in the future. Most of the governments and countries will come up with a digital currency of their own in future and in such a scenario most private currencies, including stable coins, are likely to disappear, Garg opined.

Stable coins are those cryptocurrencies which are linked to a fiat currency such as the dollar. Thus the speculation around stable coins, unlike Bitcoin, is comparatively less. However, the challenge is that such cryptocurrencies are privately held.

Roadmap for CBDCs

Many nations including India are in the process of creating their own CBDCs. Garg said that the government owned digital currencies can be modelled differently compared to the existing private cryptocurrencies. Garg suggested that the CBDCs should be dematerialised and with that dematerialised rupee all transactions could be allowed digitally.

Garg also said that the RBI may plan to have a separate set of cryptocurrency for wholesale transactions, but having two currencies may not be a good idea in the long run.

However, the former finance secretary did not rule out the relevance of physical currency even after the launch of CBDCs as for a country like India implementation of reforms can’t be done at one go.

Garg, who previously chaired an inter-ministerial committee on cryptocurrencies, believes that crypto platforms are the way of the future.

The actual issue with cryptocurrencies, though, is how they are priced. At the same time, the platforms incorporate every input into the currency that they host, potentially complicating cross-currency transactions.

Cryptocurrencies, such as Bitcoin, have also evolved into assets in the hands of speculators, rather than only being a means of exchange. Garg advocated for enacting a cryptocurrency transaction law modelled after securities contract transactions, the report mentioned.