Reserve Bank of India (RBI) governor Raghuram Rajan on Wednesday expressed concerns over the regulation of digital currency Bitcoin, saying the virtual nature of the currency raised questions about how its value would be governed.
Rajan said investors and users should exercise caution before using Bitcoin as a consistent means of exchange.
He, however, declined to share details of RBI’s future course of action on Bitcoin.
“We had put out a cautionary advisory explaining some of the concerns that investors and users of Bitcoin should have, without in anyway saying anything about our future course of action. As a currency, I do worry a little bit when the underlying fluctuates tremendously,” Rajan said, speaking at the Nasscom India Leadership Forum 2014.
“One of the values of a currency is stability and the extent a currency is the target of speculation as opposed to primarily a means of exchange, it does create some concerns for the user,” Rajan added. “In that sense, it has a more diminished value as a means of exchange than something more stable.”
Currencies have traditionally been centrally regulated, and the sudden popularity of Bitcoins has invoked mixed reactions from regulators across the globe.