India: Central Bank Report States Crypto Does Not Threaten Financial Stability

The Reserve Bank of India (RBI) has stated that cryptocurrencies currently pose no threat to financial stability in its recent financial report, published Dec. 28.

The document entitled “Report on Trend and Progress of Banking in India 2017-18” reads:

“[C]rypto-assets do not pose risks to global financial stability currently. The market continues to evolve rapidly, however, and this initial assessment could change if crypto-assets were to become more widely used or interconnected with the core of the regulated financial system.

RBI quoted a conclusion drawn from a recent report by the Financial Stability Board (FSB) — an international agency consisting of banking and financial institutions from different countries, including India. RBI itself is a member of the FSB, along with country’s Securities and Exchange Board and Ministry of Finance.

In its study “Crypto-asset markets: Potential channels for future financial stability implications,” published October, the FSB claimed that bankers see no significant danger in the existence of cryptocurrencies, as their total market cap by that time had barely reached 2 percent of the global value of gold. However, the board urged watchdogs to keep an eye on the digital coin markets, given their quick growth.

RBI reiterated this stance in its December report, stating that сryptocurrencies need “constant monitoring,” given their rapid expansion in recent years.

The legal framework for cryptocurrencies in India remains unclear, as RBI formally stopped all banks from dealing with cryptocurrencies in April. The de facto prohibition came into effect in June, while the Supreme Court’s hearings on the case — initiated by local crypto firms — were repeatedly postponed. At the same time, an Indian government panel is reportedly considering a complete ban on crypto.

Initially, RBI had considered launching its own central bank digital currency, dubbed “Laxmi.” However, in January, the bank gave up the idea of making a stablecoin tied to the rupee, stating that it’s too early to even think about it.

Yesterday, Jan. 3, the police of the Indian state of Jammu and Kashmir issued a statement, warning the public against investing in cryptocurrencies due to the “heightened risk” associated with them. The authorities also added that digital currencies are not regulated by the Indian government.

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BRICS Summit: Major Banks From Member States Sign MoU on DLT Research

Five major banks from each BRICS member state signed a Memorandum of Understanding (MoU) on the development of distributed ledger technology (DLT), according to an official press release July 26.

During the 10th International BRICS Summit in Johannesburg, banks from the emerging economies of Brazil, Russia, India, China and South Africa agreed to a joint study of DLT technology like blockchain, “in the interests of the development of the digital economy.” BRICS countries have met annually since 2009 to discuss initiatives for economic, cultural, and political cooperation between member states.

The State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank), the Brazilian National Bank for Economic and Social Development (BNDES), the Export-Import Bank of India, the China Development Bank, and the Development Bank of Southern Africa (DBSA) will all participate in the study.

The main focus of the 10th BRICS Summit in South Africa is cooperation in economic development “in the face of the fourth industrial revolution,” according to the press release. Mikhail Poluboyarinov, First Deputy Chairman and a Member of the Board at Vnesheconombank, said of the MoU:

“The current agreement allows the development banks of BRICS countries to study the applications of innovative technologies in infrastructure finance and bank products optimization.”

Earlier this month, the Reserve Bank of Zimbabwe (RBZ) initiated its own study of blockchain technology, with the eventual goal of integrating it into the bank’s business processes. RBZ governor John Mangudya said that the bank wants to embrace the technology in order to keep up with blockchain banking innovations in other countries.

Banks worldwide are finding a variety of uses cases and applications for the technology.

Last week, Bank of America (BoA) filed a patent for a blockchain-based system that allows for the external validation of data, and the Bank of Thailand (BoT) is considering blockchain tech for cross-border payments and fraud protection.

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