How close is the world to the widespread rollout of CBDCs & what is RBI's pilot project

Summary

The video script discusses the growing interest in Central Bank Digital Currencies (CBDCs), as indicated by the Bank for International Settlements' survey showing 94% of central banks exploring CBDCs. It highlights the pilot projects in countries like India and the debate over whether CBDCs should be interest-bearing. The conversation also touches on the regulatory landscape for cryptocurrencies, the potential impact of countries like Russia and the US considering legalizing cryptos for international trade, and the need for global harmonization in cryptocurrency regulations.

Takeaways

• 📈 The Bank for International Settlements (BIS) conducts an annual survey to gauge the global interest in Central Bank Digital Currencies (CBDCs), indicating a growing trend with 94% of central banks exploring CBDCs.
• 🌐 There is a significant interest in the wholesale version of CBDCs for cross-border payments and financial institutions' settlements, with retail CBDCs facing more challenges in adoption.
• 🏦 India's central bank, the RBI, has initiated pilot projects for both wholesale and retail CBDCs, with a focus on financial inclusion and offline payments.
• 💡 The preference for UPI over retail CBDCs in India highlights the need for interoperability and consumer trust in new financial technologies.
• 💰 The debate over whether CBDCs should be interest-bearing is ongoing, with arguments for immediate monetary policy transmission and against potential negative impacts on banks.
• 🌍 Major countries, including G20 members, are exploring CBDCs, with some like the Bahamas already implementing retail CBDCs for financial inclusion.
• 📉 Concerns about the volatility and stability risks of private cryptocurrencies like Bitcoin have led central banks to consider CBDCs as a more regulated alternative.
• 🔐 There is a global movement towards regulating cryptocurrencies, with frameworks being developed to address consumer protection and anti-money laundering.
• 📝 The IMF and the Financial Stability Board have provided a roadmap for regulating cryptocurrencies, emphasizing the need for licensing and disclosure requirements.
• 🇷🇺 Russia has introduced a legal framework to use cryptocurrencies for international trade to circumvent Western sanctions, but not for domestic use.
• 🔑 The distinction between how cryptocurrencies are classified—whether as commodities or securities—varies by country, indicating a need for harmonization in global regulations.

Q & A

What is the main topic of discussion in this episode of 'Macros Sudra'?

The main topic of discussion in this episode is Central Bank Digital Currencies (CBDCs) and cryptocurrencies, exploring the growing interest in CBDCs globally and the various considerations and challenges associated with their implementation.

What is the source of information used to gauge the global interest in CBDCs?

The Bank for International Settlements (BIS) survey of global central banks is used to gauge the global interest in CBDCs. This annual survey assesses the progress of central banks in developing a digital version of their sovereign currency.

How many central banks participated in the BIS survey conducted in 2023, and what did they find regarding CBDC interest?

86 central banks participated in the BIS survey in 2023, and they found that 94% of them are exploring the use of CBDCs, indicating a significant level of interest.

What are the different phases of CBDC development mentioned in the script?

The different phases of CBDC development mentioned are the search phase, where central banks are trying to understand the potential purposes of digital currency; the experimental phase; and the pilot phase, which is a more advanced stage of testing before full implementation.

Which countries are leading the way in CBDC implementation, and what are their objectives?

Countries like India and the Bahamas are leading in CBDC implementation. India initiated pilots for both wholesale and retail CBDCs in 2022, with various objectives such as financial inclusion, offline payments, and government scheme disbursements. The Bahamas has rolled out retail CBDC to promote financial inclusion in remote areas.

What is the difference between retail and wholesale CBDCs?

Retail CBDCs are designed for use by individuals and the public for person-to-person or person-to-merchant transactions, similar to cash or UPI. Wholesale CBDCs, on the other hand, are used among financial institutions for settlement purposes or interactions between banks and the central bank.

Why is there a growing interest in the wholesale version of CBDCs according to the BIS survey?

The growing interest in the wholesale version of CBDCs is due to its potential use for cross-border payments, which can be time-consuming, costly, and fraught with frictions. CBDCs can help streamline these processes.

What is one of the major concerns regarding the implementation of retail CBDCs?

One of the major concerns is the preference of the public for existing payment methods like UPI over CBDCs, as well as a lack of information and trust in CBDCs, leading to slower adoption rates than expected.

What is the debate around whether CBDCs should be interest-bearing or not?

The debate revolves around the impact of interest-bearing CBDCs on monetary policy transmission and their competition with bank deposits. Interest-bearing CBDCs could promote immediate transmission of policy rates but might also compress bank margins and disrupt the financial system.

How do central banks view private cryptocurrencies in relation to CBDCs?

Central banks see private cryptocurrencies as a potential risk to financial stability due to their volatility. They are interested in CBDCs as a way to preserve the sovereignty of their currencies and to provide a regulated alternative to private cryptocurrencies.

What is the current regulatory landscape for cryptocurrencies globally?

The regulatory landscape for cryptocurrencies is evolving, with many countries developing frameworks to regulate cryptocurrencies and stable coins. This includes licensing exchanges, ensuring consumer protection, and establishing proper disclosure requirements.

Outlines

00:00

🚀 Introduction to Central Bank Digital Currencies (CBDCs)

The script opens with a humorous introduction to life lessons, then transitions into a serious discussion on CBDCs and cryptocurrencies, led by TCA Sharad, Deputy Editor at The Print, and Radika Pand, an associate professor at NIPFP. They discuss the growing global interest in CBDCs, as evidenced by the Bank for International Settlements' survey, which shows 94% of central banks exploring CBDCs. The conversation covers the different phases of CBDC development, including pilot programs like those initiated by the Reserve Bank of India (RBI) in 2022 for both wholesale and retail digital currencies.

05:01

🌐 Exploring CBDCs for Retail and Wholesale Use

This paragraph delves deeper into the purposes of CBDCs, distinguishing between retail CBDCs for public transactions and wholesale CBDCs for financial institutions and cross-border payments. The discussion highlights the increased interest in wholesale CBDCs for their potential to streamline cross-border transactions, as seen in projects like Project Mariana. It also touches on the challenges of retail CBDC adoption, including competition with UPI in India and the public's preference for physical cash, despite the gradual increase in digital currency usage.

10:03

💡 The Debate Over Interest-Bearing CBDCs

The conversation turns to the critical issue of whether CBDCs should be interest-bearing. The potential benefits include more direct monetary policy transmission, as changes in policy rates could be immediately reflected in CBDC interest rates. However, the risks involve competition with bank deposits, which could lead to higher interest rates offered by banks and affect their profitability. The RBI has indicated a preference for non-interest-bearing CBDCs in India, while globally, opinions are split, with examples like Israel considering interest-bearing CBDCs to spur bank competition.

15:03

🔒 Central Banks and the Regulation of Cryptocurrencies

The script addresses concerns about private cryptocurrencies, such as Bitcoin and Ethereum, due to their volatility and potential financial stability risks. Central banks are considering CBDCs as a means to preserve the sovereignty of their currencies and ensure a unified currency system. The discussion also covers the regulatory frameworks being developed around the world for cryptocurrencies, emphasizing the need for consumer protection and risk management in the face of incidents like the VazirX theft.

20:06

🌍 International Perspectives on Cryptocurrency Regulation

This paragraph outlines the international efforts to regulate cryptocurrencies, with a focus on the EU's Markets in Crypto-Assets (MiCA) framework and the UK's post-EU regulatory approach. It highlights the importance of regulating exchanges, ensuring consumer protection, and managing the risks associated with stablecoins. The paragraph also mentions Russia's decision to use cryptocurrencies for international trade to circumvent Western sanctions, while internally maintaining a ban on their use as legal tender.

🔄 The Future of CBDCs and Cryptocurrencies

The final paragraph summarizes the global interest in CBDCs, with 94% of surveyed central banks experimenting with or considering them. It also discusses the need for international cooperation on uniform regulations and taxonomies for cryptocurrencies and stablecoins to prevent regulatory arbitrage. The paragraph concludes by emphasizing the growing action in this space and the importance of watching for future developments.

Keywords

💡Central Bank Digital Currencies (CBDCs)

CBDCs are digital forms of a country's official currency, issued and regulated by the central bank. They are designed to function like physical currency but in a digital format. In the video, CBDCs are a central theme, with discussions on their development, use cases, and the growing interest from central banks globally. For example, the script mentions that 94% of central banks are exploring the use of CBDCs for various purposes, including retail transactions and cross-border payments.

💡Bank for International Settlements (BIS)

The BIS is an international financial institution that conducts a survey of global central banks to gauge their interest and progress in developing CBDCs. The survey results are referenced in the script to highlight the increasing interest in CBDCs among central banks. The BIS survey is an important resource for understanding the global landscape of digital currency development.

💡Retail CBDCs

Retail CBDCs are designed for use by the general public for everyday transactions, similar to cash or digital payment methods like UPI. The script discusses the interest in retail CBDCs for person-to-person or person-to-merchant transactions, and how some countries, including India, are conducting pilot projects for retail CBDCs.

💡Wholesale CBDCs

Wholesale CBDCs are used among financial institutions, such as banks, for settlement purposes or interactions with central banks. The script indicates a growing interest in wholesale CBDCs for cross-border payments and within the financial sector, as they can streamline transactions and reduce friction.

💡Pilot Project

A pilot project is a trial implementation of a new initiative, in this case, the introduction of CBDCs. The script mentions that the Reserve Bank of India (RBI) initiated pilot projects for both wholesale and retail CBDCs in 2022, demonstrating the practical exploration of digital currencies in real-world applications.

💡Financial Inclusion

Financial inclusion refers to the access of all individuals and businesses to affordable and appropriate financial products and services. The script discusses how CBDCs can promote financial inclusion, particularly in remote areas where traditional banking services are not readily available, as seen in the example of the Bahamas.

💡Interest-Bearing CBDCs

An interest-bearing CBDC would pay interest to holders, differing from the typical definition of CBDCs as a digital version of cash. The script explores the debate around whether CBDCs should offer interest, with implications for monetary policy transmission and the potential impact on bank deposits.

💡Monetary Policy Transmission

Monetary policy transmission refers to how changes in central bank policies, such as interest rates, affect the broader economy. The script discusses how interest-bearing CBDCs could enhance this transmission by directly linking the central bank's policy rates to the interest paid on CBDCs held by the public.

💡Stablecoins

Stablecoins are a type of cryptocurrency designed to minimize volatility by being pegged to a stable asset, such as the US dollar. The script mentions the growing use of stablecoins for remittances and how central banks are considering CBDCs as a potential alternative to private stablecoins for international transactions.

💡Regulation of Cryptocurrencies

The script discusses the need for and the development of regulatory frameworks for cryptocurrencies to address issues like consumer protection, anti-money laundering, and financial stability. It highlights the efforts of countries like the UK and the EU to establish regulations for cryptocurrencies and the importance of harmonizing these regulations internationally.

💡Remittances

Remittances are money transfers sent by foreign workers to their home countries. The script notes the increasing use of stablecoins for remittances, particularly from the US to Latin American countries, and how CBDCs could potentially serve this purpose, offering a more regulated and potentially cheaper alternative.

Highlights

94% of central banks are exploring the use of Central Bank Digital Currencies (CBDCs), indicating a significant global interest.

The Bank for International Settlements conducts an annual survey to gauge the progress of central banks on digital versions of their currencies.

India initiated pilot projects for both wholesale and retail CBDCs in 2022, showcasing an advanced stage of CBDC development.

Different countries have various objectives for CBDCs, including retail use for person-to-person transactions and wholesale use for financial institutions and cross-border payments.

There is a growing interest in the wholesale version of CBDCs for efficiency in cross-border payments.

Project Mariana is an example of a pilot project aiming to improve cross-border payment efficiency using CBDCs.

Most CBDCs are currently in the pilot or experimental phase, with only a few countries like the Bahamas having fully rolled out retail CBDCs.

The Bahamas uses CBDCs to promote financial inclusion in remote areas where traditional banking infrastructure is lacking.

In India, around 50 lakh persons and 4 lakh merchants are using the retail CBDC in pilot projects, but there is a preference for UPI over CBDC.

RBI Governor raised concerns about the preference for UPI over CBDC and the challenges of making retail CBDCs interoperable with UPI.

CBDCs are considered by central banks as a way to preserve the sovereignty of their currencies and ensure the singleness of currency.

There is a debate on whether CBDCs should be interest-bearing, with implications for competition with bank deposits and monetary policy transmission.

Israel is an example of a country planning to issue an interest-bearing CBDC to spur competition among banks.

Central banks are concerned about the volatility and financial stability risks associated with private cryptocurrencies like Bitcoin.

There is a move towards regulating cryptocurrencies globally, with the EU setting up a regulatory framework called MAA.

Russia has introduced a legal framework to allow the use of cryptocurrencies for international trade to circumvent Western sanctions.

The US is grappling with the classification of cryptocurrencies, with regulators debating whether they are securities or commodities.

There is a need for harmonization of cryptocurrency regulations and taxonomies globally to prevent regulatory arbitrage.

India is expected to release a discussion paper on cryptocurrencies in September, indicating a growing interest and need for regulation.

Transcripts

here's the 30C lesson on what Legends

know never practice nunchucks in a

crowded room never eat choli before a

road

trip always take your shirt off before

you IR

it don't take a call near a swimming

pool and don't forget saving is not

investing Legends don't just say they

invest in mutual funds mutual fund

Investments are subject to Market risks

read old scheme related documents

carefully hello and welcome to this

episode of macros sudra I'm TCA Sharad

ragavan Deputy editor at the print and

today we're going to be talking about

something that is not to do with

macroeconomics or inflation or growth

we're going to be talking about Central

Bank digital currencies and

cryptocurrencies now there's been a lot

of interest in this recently in the

world and to discuss all of this what

the concerns are what the issues are we

have with us radika Pand associate

professor at nipfp thank you so much

radika for joining us thank sh so now

radika we have been seeing uh a rising

interest in Central Bank digital

currencies right uh but could you tell

us you know which countries and how we

know how much the interest has been

growing yeah so to in order to gauge the

interest of um globally what is the

interest of Central Bank digital

currencies a very important resource is

the bis survey of global central banks

right so there's this bank for

international settlements which conducts

a survey of uh central banks across the

world and uh they provide them with a

questionnaire to try to find out if they

are making some progress on the digital

version of their uh Sovereign currency

or their fiat currency and for what

purpose are they looking at rolling out

a digital version or the Central Bank

digital currency uh so this is an annual

survey which is uh conducted for uh

Central Bank across the globe and uh we

have this survey findings came out uh

towards the end of June uh for the year

2023 and there we see that out of so 86

central banks participated in this

survey including RBI including RBI yes

and uh 94% of the central banks said

that they are uh exploring the use of

cbdc 94% 94% and now there could be at

different uh phases there could be some

central banks who are at the search

phase that they are just trying to

understand what purpose the uh digital

currency can be uh put forward to there

are some uh countries that are in a

relatively more advanced stage so they

are going into experimental phase or

What's called the pilot phase that's

like India like India yeah for in 2022

RBI uh initiated pilot of both the

wholesale and Retail uh cbdc uh so

various countries have different

objectives for rolling out of cbdcs uh

some are more in favor of retail cbdcs

which is uh you know the use of digital

currency by persons like us not the

financial institutions but by uh

households by retail uh individuals

public basically for public for personto

person transaction or person to Merchant

transaction just like we use cash or we

use UPI that purpose so that is a retail

version of cbdc and wholesale cbdc is

when it is used amongst the financial

institutions uh for example banks are

using for settlement purposes or there

is a interaction between Banks and uh

RBI so when they are using uh that is

the wholesale version of cbdc also for

crossborder uh payments also wholesale

cbdc is used so there are different use

cases what the survey tells us is that

you know the change that has happened in

2023 is that there is a greater interest

in the wholesale version of cbdc uh both

from the perspective of advanced

economies and Retail Central Bank they

are more inclined to First Look at the

wholesale version because in retail

version there are several uh you know

question that they have to Grapple with

and we can talk about those uh issues

but if we have to in summary talk about

the interest yes the interest is rising

and there is wearing level of Interest

the uh the the uh uh interaction with

the digital currency is at wearing

speeds across the various uh uh central

banks and uh what broadly we see that

there is a greater interest for

wholesale version rather than the retail

version uh because wholesale can also be

used for cross border payments and that

is one area where there's lot of pilot

projects going on like you know there's

a project called project Mariana where a

couple of central banks are uh

interacting amongst themselves to settle

crossborder payments because there is

this uh understanding that crossb

payments is quite time taking it has a

lot of costs involved there's a lot of

frictions involved so uh it uh cbdcs are

being used for this uh uh purpose and uh

now could you give us an idea about uh

what some of the major countries are

that are going for cbdcs as in is the US

or the UK yeah yeah so what we see is

that you know most of the advanced

economy and Emerging Market developing

developing economies are going in for uh

uh cbdcs uh G20 countries most of the

G20 countries are rolling out uh cbdcs

uh but most of the cbdcs are right now

in the phase of pilot or experimental

phase uh if we want to talk about those

examples where cbdc has already been

rolled out there we have only uh you

know two three examples like Bahamas is

one example uh where it is being used

for the purpose of promoting Financial

inclusion because there the islands are

at remote places and it's very hard to

set up ATMs and uh uh you know to also

to ensure that the government schemes

are reaching uh Central Bank digital

currency is being used so there are

these three countries where it's it's

actually been rolled out the uh retail

cbdc for laymen like us it's been rolled

out but in most of the other uh

countries it is either in the research

phase or in the advanced uh uh phase or

in the pilot phase for example in India

it's in the uh pilot phase for both

wholesale and Retail uh it's very useful

to look at the recent uh report on

currency and finance which was uh

released uh last week it gives some

numbers about the uh usability of uh you

know how many people are using the uh

cbdc the retail version in the pilot uh

project so we see that around 50 lakh

persons are using the retail cbdc as

part of the project and around 4 lakh

Merchants are using so it's rising but

one of the concern that the RBI Governor

raised was that you know there is still

greater preference for UPI so the kind

of roll out that they were expecting

that's not uh taking place because there

is a preference for uh UPI so they are

more trying to uh figure out how to make

the retail cbdc and UPI interoperable

which is also increasing but still there

is greater preference for uh UPI

therefore what now they are looking at

is looking at uh uh cbdc for financial

inclusion purposes uh for offline

payments you know for uh making sure

that the government schemes whatever

money is to be sent that can be if that

can be used through cbdc so programmable

uh utilization of money that is what is

happening right and I feel that there

amongst the public also there is largely

a lack of information which then is

leading to a lack of trust where they're

saying that look we know about UPI we

know that it's dealing in the rupee what

is this cbdc thing and why should I

transact using it absolutely and the

other thing is uh in India cbdc is like

cash and people still prefer cash those

households who prefer cash they will

prefer cash for for physical cash for

making their regular day-to-day

transaction so the shift uh has not not

taken place on expected lines though it

is picking up at a gradual Pace right

and uh so now when we talk about central

banks uh increasingly thinking about uh

adopting cbdcs what are some of the

issues that they're coming up against I

know that one of them is whether cbdc

should be interest bearing or not

interest bearing so that is one of the

more uh most important consideration

that they have to figure out when they

are talking about whether to roll out

cbdc or not not whether cbdc when if we

are holding cbdc should it offer us

interest or not because if it is an

interest bearing cbdc then it is not no

longer similar to cash it's not yes it's

not just the digital version of currency

which is the standard definition of cbdc

then it is more in competition to uh

Bank deposits because Bank deposits

offer us interest uh the uh the argument

that is given in favor of having an

interest bearing cbdc is that it

promotes uh monetary policy transmission

because if the RBI or the central bank

has raised policy repo rate or reduced

policy repo rate it uh gets transferred

immediately it gets transmitted

immediately if we have an interest

bearing cbdc because this will create a

connection between the people and the

RBI directly exactly because this is the

liability directly of the Central Bank

just like cash and we are holding

accounts we are you know interacting

with the central bank either directly or

through intermediaries so there is there

is no question of you know whether banks

will transmit the uh reduced interest

rate or not so it happens uh more

seamlessly as compared to uh through

banks so that is the argument in favor

of having an interest bearing cbdc but

the argument against it is that it uh

you know creates ripple effect or it

creates problems with the banks because

then cbdc becomes a competition to bank

deposit right then banks will have to

offer higher uh interest rates in order

to encourage people or incentivize

people to maintain deposits with them

rather than holding interest bearing

this is already a problem they're facing

that's already a problem that they are

facing see you look at uh credit deposit

ratio is quite high and uh the one of

the implicit implications of raising the

ltcg could be a move towards Bank

deposits one of the uh you know

implication downside implication

so that will again create problems and

uh then Banks would have to rely on

other high cost mechanisms of funding

they would have to raise funds through

say certificates of deposits or other uh

sources which will further compress

their margins right now we are seeing

that banks are in uh sound Financial

Health but if there is a greater

interest towards interest bearing cbdc

then it could compress margin so that is

the uh you know uh understanding in

India here we are very clear that the

cbdc roll out will be a non-interest

bearing cbdc but that is not the case

globally if we look at the bis survey

it's 5050 you know there are some

central banks who are still in favor of

rolling out an interest bearing cbdc and

most interesting example is of Israel

Israel has already uh come up with a uh

plan of issuing sheel which is their

fiat currency uh as an interest bearing

uh cbdc because they feel that that will

spur competition amongst Banks and it

will encourage Banks to lower interest

rates uh quickly rather than not having

a in contrast to not having an interest

bearing cbdc so this is one uh example

and there's lot of literature on this

the IMF is writing the bis is writing a

lot about uh this so it is an evolving

field and that is one reason why retail

cbdc is taking time because you know

this is one uh decision that central

banks have to Grapple with absolutely

and uh now the other thing that central

banks are very concerned about across

the world not just India are private

cryptocurrencies things like Bitcoin or

ethereum or Dogecoin or any one of them

uh they're highly volatile and uh

there's a stability Financial stability

risk there so now are the central banks

looking to have if they do bring in a

central bank uh cryptocurrency uh uh

then are they looking to replace the

private ones with this that more people

will move to the official one away from

the private yes that is one major

motivation if you look at the B survey

that they want to preserve central bank

money and they want to preserve the

sovereignity of their currency and they

want to ensure singleness of currency

that is a term that is being used but uh

you know and they are also exploring the

use cases of cryptocurrencies to see

that you know what is the uh purpose for

which people are using private

cryptocurrencies and uh therefore if it

is possible for uh them also to develop

the use case of cbdc in that way for

example right now what's happening is

that a lot of

remittances uh from the US to Latin

American economies are happening through

stable coins uh because there are lot of

immigrants in the uh us they want to

remit their money to their native

countries in Latin American countries

like Mexico and a lot of those

remittances are happening through stable

coin so stable coin is a kind of private

crypto Cur

but here the value is pegged to a

another official currency it could be

dollar it could be a combination of

other uh uh assets and so on and uh it

is being happening through what is

called the USD coin which is a stable

coin which is pegged oneon-one to Dollar

uh so there is a greater interest in

using stable coins for remittances and

therefore central banks are also

inclined to use to develop cbdc in such

a way that it can be used for remittance

purposes because in some countries the

share of remittances happening through

stable coins is rising at an alarming uh

pace so that is one uh used case and

overall also nowadays there's lot of in

parallel what's happening is that you

know it's now mostly understood that

banning cryptocurrencies is not the

solution no absolutely so and in fact

after the G20 presidency in India where

the IMF and the Financial stability

board came up with this synthesis paper

uh which laid down a kind of a uh road

map for regulating cryptocurrencies it's

quite clear that it's uh it is essential

for countries to have a framework for

regulating cryptocurrencies and that is

what we are seeing across the world we

are seeing that you know many countries

uh for example recently UK UK is now out

of the EU UK has set up in in its entire

Financial regulation now they are are

regulating cryptocurrencies and stable

coins as well uh EU has come up with a

framework and from the second half of

2024 they are going to regulate uh

cryptocurrencies when we say regulate it

means that the the the exchanges that

will provide cryptocurrencies they will

have to be licensed there will be a

consumer protection framework there will

be separation of client assets and

consumer assets they will have to you

know have proper disclosure requirements

on what are the risks and returns and so

on so that that's the Contours of

regulatory uh framework and that's

happening in emerging economies as well

we saw recently turkey has released a

regulatory framework for

cryptocurrencies so uh cryptocurrencies

there is a greater uh interest towards

regulating uh cryptocurrencies and at

the same time central banks are studying

the uses of cryptocurrencies so that

they can design their digital currencies

in a way that that acts as a substitute

for for the privately issued

cryptocurrencies right and actually uh

there were some source-based news

reports recently saying that uh in

September even the Indian government

will come out with a discussion paper uh

not its own regulations but at least the

discussion paper so that we can talk

about yeah that's a very welcome step

because you know we need to have some

conversation around talking about

cryptocurrencies right now it's only in

the form of you know uh addressing the

anti-money laundering concerns but there

are various other concerns we saw Rec ly

U cryptocurrency exchange vazir X was

subject to a theft and therefore unless

we have a framework it's and what the

kind of you know recovery plan that they

have proposed is subject to criticism

because it's not giving enough uh uh

Assurance to the consumer so there is a

need it underscores the need for having

some form of Regulation and uh now that

she mentioned wasir X I can actually

plug my own story if you wait till

tomorrow

or uh Friday morning then you'll see

I've done a deep dive into what's

happened with werx what the regulatory

implications are whether wix's Solutions

are uh whether they stand up to Legal

scrutiny or whether it'll face some

legal backlash all of that so do look

out for the story and uh so now uh we

have a question a few questions from the

audience adiya asks uh he asked that we

hardly see any crypto related news

nowadays uh not not counting wasir X has

the craze finally gone and have

countries and banks around the world

realize the fact that this is not a real

currency and it's a bubble which will

burst in the near future or do you think

that crypto still has some growth left

considering the fact that technology

like UPI is on the surge no see globally

there is uh interest in cryptocurrencies

as we've seen you know if we uh look at

some of the developments that are

happening across the world we see that

more and more countries are now

developing regulatory Frameworks for

cryptocurrencies as well as stable coins

as I mentioned the entire EU now has a

framework which is called markets in

cryptocurrencies it is called MAA

regulations for the EU and they have you

know very nicely categorized

cryptocurrencies into three categories

and based on that they have the

regulatory uh framework depending on

whether it is stable or not so they are

different graded levels of Regulation so

there is interest and countries are now

looking at regulating uh

cryptocurrencies in fact uh today the

usfed or last night the usfed has

retained the interest rate uh they had

their fomc meeting where they have

maintained status quo so that has

resulted in a slight decline in the

Bitcoin prices because uh all these you

know cryptocurrency prices are sensitive

to what is happening in the US what what

what's happening uh on the GE political

uh front so we are seeing that you know

there is a slight uh decline in the

prices but if we look at overall

cryptocurrency market capitalization

just to give a number it's still around

$2.4 trillion so there is a slight

decline in bitcoin price which is the

most dominant form of cryptocurrency uh

but overall there is interest it's only

thing it's quite volatile and it it's uh

subject to a lot of developments tend to

influence the prices and and but overall

there there's lots happening across the

world on the regulatory front on

understanding the use cases particularly

of stable coins because stable coins is

considered more uh stable as compared to

cryptocurrencies because it could be

pegged but again there are various risks

associated with stable coins so uh

countries are studying those risks and

trying to frame design their regulatory

Frameworks accordingly so there's

definitely interest in cryptocurrencies

and in fact uh Russia has recently

announced that they are going to use

cryptocurrencies for international trade

so there is interest yes and uh if you

ask some of the market participants in

India you'll see that within India also

the market is it's grown to about2 to3

billion doar the assets under management

with all of the uh Indian cryptocurrency

exchanges and what they say is that

Indians trading on foreign exchanges is

at least two to three times this amount

or rather three to five times this

amount so you can see that there is a

lot of interest uh now sorab asks with

the US and Russia thinking of legalizing

cryptos what will be the implications on

the economy if they become official

mediums of exchange or currency in these

countries so an important distinction

needs to be understood particularly for

Russia that what they have done is that

they have allowed the use of uh they

have you know introduced a legal

framework to allow cryptocurrencies for

international trade transaction uh

because a lot of their Imports are still

to be import payments are to be made in

dollars and the fact that they are

subject to uh sanctions by the West they

are not able to make those payments

which is resulting in a decline in their

Imports in order to circumvent those uh

sanctions uh the Russian Central Bank

has announced that they will develop a

framework to allow the use of

cryptocurrencies for making

international trade uh payment but

internally the use of cryptocurrency is

still banned right so it's not going to

be used as a legal tender or as a means

of payment they are going to use

cryptocurrencies for a narrow uh measure

which is to skirt the uh Western

sanction and uh for America it's they

are still grappling with you know

there's a lot of uh news or there's a

lot of narrative around the use of

cryptocurrencies whether it's a security

or a commodity because in the US there

are lot of regulators there's a

Securities and Exchange Commission

there's a cftc which is the uh which

deals with commodities and Futures

Trading and there is this uh uh tussle

between these two Regulators they try to

assert whether they try to uh you know

there is this uh assertion where one

regulator is saying that it's a

commodity other is saying it's a

security both are exercising their uh

jurisdiction and uh that that is leading

to some concern and chaos and it has to

become harmonized and therefore some of

the other countries like Nigeria has

taken a queue from the US and also

declared that they are going to use

cryptocurrencies as they are going to

regulate cryptocurrencies as Commodities

the other you know difficulty is that

across the uh world if you look at the

various regulation the taxonomy is not

uniform yes you know somewhere it's

called vda virtual digital asset

somewhere it is call crypto asset

somewhere just called crypto token we

call it a virtual digital asset yeah we

call it a virtual digital asset so

there's lot of there there's difference

in taxonomy there's difference in how we

are treating cryptocurrencies how we are

treating uh stable coins also there are

lot of distinctions for example eu's

regulation has different distinctions

for stable coins so there is a scope for

somewhere harmonizing these regulation

to prevent the risk of regulatory

Arbitrage and I think the process has

already begun at least company all

countries most of the countries have

started thinking about regulating

cryptocurrencies and the next step would

be to ensure some form of

harmonization right so there you go

there clearly is a lot of interest

around the world 94% of the surveyed

Central Bank said that they are

experimenting with cbdcs or thinking

about it in some way or the other some

are in more advanced stages like us the

RBI has already rolled out pilot

projects for its own cbdc so there is a

a lot of interest but there are some

concerns as well there's a need for

countries to work together on this come

up with some sort of uniform regulations

uniform taxonomy uh on how you refer to

these currencies whether they're private

uh cryptocurrencies or you call them

virtual digital assets whether they're

Commodities or they're treated as

Securities there's there's a lot to go

over but interest is growing so watch

this space you're going to see a lot of

action in in the near future but on that

note that's all from us thank you so

much for watching

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