Former Reserve Bank of India governor Raghuram Rajan has made a positive statement about Bitcoin. He has asserted that Bitcoin and Libra could played a crucial role in a world where central banks globally begin to issue their own digital currencies.
“I would like to think that these private currencies are also in competition with the central bank digital currency,” Rajan told CNBC’s “Beyond the Valley” podcast.
Digital currencies are likely to have big implications for the role central banks and retail lenders play in the world and could change the face of the entire financial system.
While the idea is still being debated, central banks would likely issue digital versions of fiat currencies. The People’s Bank of China is already doing pilots while other central banks are considering whether to issue their own.
Bitcoin is a “decentralized” cryptocurrency meaning it has no central authority governing its issuance, unlike fiat currencies. It is built on so-called blockchain technology, which at its simplest level, is an immutable public ledger of bitcoin transactions. Bitcoin has often been criticized as being a speculative asset. Legendary investor Warren Buffett said earlier this year that it has “no value.”
Libra takes a more centralized approach. It is a project that was proposed by a Facebook-led consortium of companies last year. But Libra drew heavy criticism from regulators, particularly because of its ties to Facebook and its murky track record of data privacy.