The new unit will research, draft rules and supervise new emerging technologies in the future. The Reserve Bank of India (RBI) has formed a new unit within the central bank to beef up its own intellectual capital in the face of emerging technologies like cryptocurrency, blockchain and artificial intelligence. This new unit will research and possibly draft rules and supervise new emerging technologies in the future, two people familiar with the central bank’s plans 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,” said one of the people cited above.
The unit is just about a month old as of now and though a chief general manager is identified to lead it, a formal announcement internally has not been made yet. An RBI spokesperson did not reply to an email seeking comment. Analysts said RBI is doing the right thing at a time when new technologies are set to change business models. “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,” said Piyush Singh, managing director-financial services, Asia Pacific and Africa, at Accenture.
“This is true specially in the financial world where paper-based regulations are a passe’ due to the onset of digital technologies. It is extremely important and the right thing to do from RBI's perspective.”RBI has formed this new unit even as it has more than once issued a warning on trading in cryptocurrencies. In December 2017 even as Bitcoins hit a record high, RBI warned users, holders and traders of virtual currencies, including Bitcoins regarding the potential“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,” the person cited above said. In April, RBI said it would set up a data sciences laboratory with professionals from computer science, data analytics, statistics, economics, econometrics and finance background. The idea is to use data, analytics and real time information for different RBI functions like inflation targeting, banking regulations and policy enforcement. This unit on data sciences is likely to start in December 2018.
The Economic Times, 27th August 2018
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