Former head of the Central Bank of India admits the coexistence of Bitcoin, Libra and national digital currencies
Raghuram Rajan, former chairman of the Reserve Bank of India and chief economist at the International Monetary Fund in 2003-2007, believes that non-government digital currencies like Bitcoin and Libra will have a role to play in the world when central banks start issuing their own digital currencies..
“I would like to think that these private currencies are in competition with the central bank’s digital currency,” he told CNBC..
India is known for its history of cryptocurrency-related bans. Presumably, a law is being prepared there that will limit their turnover and trade, after the measures of the central bank were not effective enough..
Rajan calls bitcoin a “speculative asset” in contrast to currencies that can be used to conduct transactions on a large scale. He notes that investors choose Bitcoin when traditional assets like bonds are becoming less attractive..
“In this respect, Bitcoin is a bit like gold. Gold has some value because we value it in jewelry, but bitcoin doesn’t even have that. However, it is valuable because others think so, ”he said. – On the other hand, Libra is an attempt to create a currency that would be used for transactions. The idea is not to keep the asset in anticipation of its growth, but to use it to carry out transactions “.
Rajan also noted that the existence of one private digital currency would lead to the formation of a monopoly and related problems, but if there were several such currencies, they would be able to compete for different functions..
“Bitcoin in the future will have value as a store of value or a speculative asset, while Libra can become the type of currency that will be used more for transactions,” he added..