Indian Finance Minister Nirmala Sitharaman has said that despite a sense of urgency kicked up by Facebook’s proposal to create a global currency system (Libra), many countries remain cautious about “rushing into” a cryptocurrency arms race, Business Standard reports.
“On our side, the Reserve Bank Governor (Shantikanta Das) spoke about (Libra) during our turn to intervene (at recent meetings of the International Monetary Fund and the World Bank),” Sitharaman told Indian reporters following the meetings. “I got the sense that many countries were cautioning on rushing into this.”
Currently, the Reserve Bank of India has imposed a ban on cryptocurrencies in India. The ban is being observed by all licensed banks in the region.
“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.
Though some presentations were pro-crypto, on balance, delegates acknowledged complexities, Sitharaman stated. “(S)ome 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 if necessary step forward. So everyone was stepping cautiously on it,” she said.
Kristalina Georgieva, Managing Director of the IMF told the reporters that the IMF has been working with organizations like the Financial Stability Board and the European Central Bank around the benefits and risks of cryptocurrencies.
“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,” she said.
Georgieva admitted that digital currency can be used for illegal ends, including terrorist financing.
She also acknowledged how the Libra currency systems, if rapidly implemented among Facebook’s 2.4 billion users, could affect the stability of small currencies if citizens in certain regions decide to dump local currencies in favour of Libra. “And there are issues on sovereignty that need to be well understood and addressed. And in that sense, we will continue to work,” Georgieva said.
She said the IMF is looking at the whole phenomenon of the “digitization” of currencies, not just at Libra:
“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.”