The Times of India has reported on the Reserve Bank of India’s view on bitcoin and blockchain technology.
Two years ago, in December 2013, the Reserve Bank of India warned against using cryptocurrencies, including bitcoin, due to possible financial, operational, legal, customer protection and security-related risks they would be vulnerable to. Now, however, the benefits of the underlying blockchain technology are being explored.
In its recent report on financial stability, RBI highlighted the focus on blockchain, which is being investigated by a number of financial institutions worldwide, some of which are experimenting with private blockchains. Unlike other reserve banks, it is very much the blockchain technology and not the cryptocurrencies that interest the RBI, who are interested in the immutable and trust-less nature of the decentralised system, saying: “With its potential to fight counterfeiting, the ‘blockchain’ is likely to bring about a major transformation in the functioning of financial markets, collateral identification (land records for instance) and payments system,”.
In contrast to the positive aspects, RBI did mention that in addition to all the benefits, it was still necessary for regulators and authorities to remain on top of developments in the technology, especially as many of the world’s leading banks are investigating implementing private blockchains which would revolutionize their businesses, drastically improving speed and efficiency in payment systems, trade finance and other areas.