The Reserve Bank of India (RBI) has formed a special division to update its intellectual assets in the wake of budding technologies like artificial intelligence, cryptocurrency and blockchain. The new division will carry out research and perhaps draft rules, while monitoring new age technologies in the future, two people acquainted with the central bank’s agenda revealed.
One of the insider quoted above said “As a regulator, the RBI also has to explore new emerging areas to check what can be adopted and what cannot. A central bank has to be on top to create regulations. This new unit is on an experimental basis and will evolve as time passes.”
The one month old division is yet to appoint a chief general manager. Furthermore, the central bank is yet to make a formal announcement about the division. Analysts have opined that RBI is acting in the manner it should, considering the huge impact blockchain technology is making across the globe.
Commenting on RBI’s initiative, Piyush Singh, managing director-financial services, Asia Pacific and Africa, at Accenture,
“Unless regulators are part of the ecosystem, they understand and have a clear indication of what is accepted and what is not, it can neither protect the industry it regulates nor the consumers who use it.”
This is particularly true in the financial landscape where paper-based guidelines are outdated due to the arrival of digital technologies. From RBI’s standpoint, it is the perfect thing to do.
Notably, RBI has setup this division even while issuing frequent warnings on cryptocurrency trading.
When Bitcoin reached its historic high of about $20,000 in December 2017, RBI cautioned investors and traders of digital currencies, including Bitcoins about the implied “economic, financial, operational, legal, customer protection and security-related risks associated in dealing with virtual currencies”.
“These ideas have all taken fruit after governor [Urjit] Patel took charge two years ago. Another similar idea is the setting up of a new data sciences laboratory, which was announced in the April monetary policy,”
Back in April, RBI stated that it would establish a data sciences laboratory with professionals from statistics, data analytics, computer science, econometrics, economics and finance background. The goal is to utilize data, real time information and analytics for different RBI activities such as inflation targeting, policy enforcement and banking regulations. The proposed division is expected to begin working in December 2018.