Raghuram Rajan, the former governor of Reserve Bank of India and Chief Economist at IMF (2003-2005) in the podcast “Beyond the Valley” said Bitcoin and Libra have the potential to play a role in the world when Central Banks of the world will begin their digital currencies.
Raghuram continued and said that he believes in a world where governments of the world are working to develop their digital currency. Certain cryptocurrencies will play a major role than the world is currently anticipating. He believes that with their introduction in the world, it will likely change our financial system. He feels Bitcoin to a very small part are like gold but unlike the yellow metal, their value is based because people think it has value.
Libra and Bitcoin to Play their Different Roles
On the other hand, he believes Libra; a more stable and Facebook-owned Token can serve as a medium for financial exchanges. Libra is also backed by various fiat currencies of the world and is developed by the consortium of companies. Libra is now propagating to establish itself as a Stablecoin, so it could be backed by fiat currencies and stable the volatiles of the market as well.
Former RBI governor is of the thinking that Bitcoin is used as an alternative by investors when the traditional bonds become fluctuating. While Libra has always aimed to create fiat currency alternative and end the monopoly of certain dominating fiats like Dollar and Euros. At the same time not end up creating a private monopoly of digital currency as it will raise serious World problems.
To conclude his thoughts on this topic, Raghuram said one alternative could be to use different digital currencies for different purposes. Raghuram Rajan is a former banker and an economist who had accurately predicted the 2008 crisis.
Concerns with the Government’s Digital Currencies
Raghuram also raised concerns about how will the government handle the data that will come along with the digital currency. How will governmental bodies use the data and various concerns about its breach and safety? He continued this may give governments power to blackmail or even put a stop if someone decides to invest at their own free will but that can damage the government. Where will be privacy in all these?
Questions raised by him in the podcasts are foreseeable and valid give his expertise in the area and history of correctly predicting things.
