Rajan Says Cryptocurrency Revolution is Some Way Off

Former RBI governor Raghuram Rajan has said cryptocurrencies may not become a substitute for normal currency, but may still gain acceptance with some central banks considering regulations and their own virtual coins.

“Right now, cryptocurrencies are speculative assets. Will it stay that way? No. There will be developments. Some central banks are thinking of introducing their own cryptocurrency, backed by full faith and credit of the government,” Rajan, a professor of finance at the University of Chicago’s Booth School of Business, said at a Clubhouse interaction hosted by telecom innovator Sam Pitroda on Friday.

“It is a good technology, but I don’t think it will be a substitute for normal currency,” he said and added that they would have a market as long as there are fans who trade them with each other.

Cryptocurrencies, Rajan said, were looking for an application, and people were making claims on what and how they can do things more efficiently. “But right now, we still don’t have a really effective application. No doubt something will come down the line…

These things are not very effective in making payments yet.”

There are other currencies, he said, with their ability to make micro payments at a low cost, like pay every time one reads an article.

These payments could be costly in dollars, but cheaper in crypto.

“Some of these may come about and may revolutionize payments, but we are not there yet,” he said. S-ET

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