Former Governor of the Reserve Bank of India, Raghuram Rajan, sees the future of Bitcoin and Libra cryptos long after central banks around the world start issuing their own digital currencies. In a formal statement to CNBC on 19 August 2020, the vocal economist speculates that Bitcoin will work side by side with Central Banks digital currencies.
Rajan, who currently serves as the finance professor at the University of Chicago, is famously known for his on-point prediction of the recession of 2008. He is also fondly remembered for championing the economic revival in India for the past ten years. Rajan again has predicted a good future for Cryptocurrencies, but he insists they are not ideal for replacing fiat currencies.
Private digital currencies in direct competition with upcoming state-owned digital currencies
Rajan sees private digital currencies competing with central banks digital currency. Besides, the former top banker also sees a lot of value in Bitcoin, which he compares to gold. However, Rajan, comparing Bitcoin to Libra insists that bitcoin is more or less volatile, so predicting the crypto will mostly be used as a store of value rather than as an alternative currency like Libra. He also insists that Bitcoin has value, mainly because other people think it has value.
Rajan again backed Libra to be more as a transaction medium since it is designed to be tied to global currencies. This means that Libra consortium would roughly translate to either one euro or dollar, for instance, if approved.
Rajan also expressed concerns of his own on handling the users’ data. Rajan is against governments tracking the users’ data when, eventually, the state-owned digital currencies come into play.
More central banks are gearing towards exploring digital currencies
More central banks around the world are venturing towards exploring the digital currency space. The people’s Bank of China is already conducting pilot tests for its digital currency. The Central Banks of Japan, Britain, Switzerland and even Sweden have also teamed up with the Bank of International Settlements to assess the possibility of digital currencies and how they will be incorporated for use.