Virtual currencies pose real financial risk: RBI

RBI Deputy Governor R Gandhi has said that virtual currency (VCs) could pose huge risks to its users, as it is not governed by any central bank or monetary authorities.

 “For virtual currency, there is no central bank or monetary authority. They pose potential financial, operational, legal, customer protection and security related risks,” Gandhi said while speaking at the FinTech Conference 2017, organised by FICCI, IBA and Nasscom.

 “VCs being in digital form are stored in digital / electronic media; are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack, etc. No established framework for recourse to customer problems/disputes/charge backs, etc. is feasible,” Gandhi added.

The time has come when banking is not exclusive to banks anymore. “Technology have redefined banking and banks. Actually it is not redefinition, but de-definition. Banking is no longer what a bank does; it is also what a non-bank does. Banks are no longer those entities who do banking exclusively; the non-banks also do banking,” Gandhi said.

 Amidst talk of rising adoption of ‘digital’ in financial transactions, Gandhi also stated that adoption of blockchain or bitcoin is unlikely to kill currency.

“In all these years, you will find that currency has actually increased in absolute terms, not just in developing and emerging economies where penetration of banking and finance is not yet complete, but also in the developed economies where the penetration of banking and finance has been far larger,” Gandhi said.
DH News Service

Countries are printing more and more of currency. Perhaps the Nordic countries are the exceptions,” Gandhi said.