Reserve Bank of India Governor Raghuram Rajan, on Wednesday, raised concerns over the complex methodologies being used to determine the values of virtual currencies (VCs) such as bitcoins and litecoins.
“As a currency I do worry a little bit when the underlying fluctuates tremendously. One of the values of a currency is some stability. “Who will maintain value — can we have confidence in an unseen, unknown centre which will maintain the value of the currency or an algorithm which will maintain the value of the currency,” Dr. Rajan said at the Nasscom function here.
The RBI, he said, was now studying the issue, and would come out with a ‘considered view’ on the virtual currencies soon.
Dr. Rajan also pointed out his attention towards the element of speculation — the value of a bitcoin had grown multiple times in the last few months. If a “currency is a target of speculation, as opposed to primarily a means of exchange, it does create some concerns for the user,” he said. According to some estimates, there are over 60 such currencies in operation at present.
“I don’t want to say that there is no future for these virtual currencies. I think it is a process of evolution. But for now all we have done is express the kinds of concerns we have about it without determining in any way what we intend to do,” the RBI Governor added.
“I do think that we have to understand the role of virtual currencies and how they will interact with paper currencies that you have. Who gets the benefit of senior age — that’s an important question for governments,” he said.