India Central Bank Official Warns of ‘Existential Threat’ from Stablecoin.
An official from the India Central Bank warns that stablecoin poses a “Existential Threat.”
The deputy governor of the Reserve Bank of India has cautioned that stablecoins are not helpful for developing economies like India and constitute an existential danger to policy sovereignty. According to RBI Deputy Governor T Rabi Sankar, stablecoins are advantageous for some economies, including those tied to the US and Europe.
The deputy governor promoted central bank digital currencies (CBDC), claiming that they are superior “stable solutions” for any nation as compared to stablecoins backed by fiat.
Sankar issued a warning that stablecoin might someday supplant the use of the rupee in local trade in a country like India.
The official from the RBI emphasized that stablecoins transmit the benefits gained by the government through currency issuance to private parties.
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Dollarization Is a Risk with Stablecoins
Shankar, who has expressed concerns about the dollar’s increasing influence, claimed that there is a risk of dollarization if huge stablecoins are connected to another currency.
Similar reservations about fiat-backed stablecoins had already been voiced by the G20 nations, of whom India is presently the president.
The International Monetary Fund (IMF) and the Financial Stability Board (FSB) have jointly prepared stablecoins guidelines that are anticipated to be adopted by G20 countries later this year.
Global Stablecoin Regulations
The best way to regulate stablecoins internationally has been a subject of continuing discussion. Hong Kong previously disclosed that it would proceed with establishing a legal framework for cryptocurrencies linked to fiat and other conventional financial assets.
According to rumors in the area, the Hong Kong Monetary Authority (HKMA) is now looking for public feedback on stablecoins. By the end of 2024, the financial authority hopes to have a regulatory framework in place.
A draft of a potentially historic stablecoin bill was issued by US politicians, as was previously reported in April.The draft legislation demanded a study on a CBDC issued by the Federal Reserve while proposing a ban on stablecoins like UST backed by other cryptocurrencies.
Under the Markets in Crypto Assets (MiCA) law, which is scheduled to take effect in June 2024, stablecoin operators in Europe will need to be in possession of a license from a national financial regulator in at least one country. Stablecoin issuers are urged by the European Banking Authority to take early action to conform to the ensuing requirements.
