The Reserve Bank of India (RBI) Governor, Shaktikanta Das, has cautioned about the potential for cryptocurrencies to cause the next financial crisis. In his statement, the head of the central bank emphasized the “huge inherent risks” that these digital assets pose to India’s macroeconomic and financial stability.
RBI Chief Warns of Crypto-Triggered Financial Crisis
The Reserve Bank of India (RBI) Governor, Shaktikanta Das, warned of the risks of cryptocurrencies on Wednesday. He made the following statement to express the central bank’s concerns:
Cryptocurrencies have… enormous inherent risks to our macroeconomic and financial stability.
The RBI is particularly worried about virtual currencies with no underlying value. Das clarified that these should be banned as they are highly speculative.
Indian officials refer to any cryptocurrency, other than bitcoin and ether, that has not been issued by the government as a “private” cryptocurrency. Commenting on cryptocurrency trading, Das said:
It is a 100 percent speculative activity, and I would still hold the opinion that it should be prohibited… because if it is allowed to grow, if you try to regulate it and allow it to grow, mark my words, the next crisis will come from private cryptocurrencies.
Meanwhile, India is working to launch its own central bank digital currency (CBDC). Recently, both retail and wholesale digital rupee pilots were initiated by the RBI. Das claimed that CBDCs can accelerate international money transfers and reduce costs such as printing notes. The RBI will publish its report on this matter on February 11. Deputy Governor T. Rabi Sankar asserted that India’s CBDC can do everything that cryptocurrencies can’t.
The Indian government is also attempting to improve the country’s crypto policies. This week, the government provided an update to the Lok Sabha, the lower house of India’s parliament, on the cryptocurrency bill, which was due to be discussed in parliament’s winter session last year.
In addition, India’s Finance Minister, Nirmala Sitharaman, revealed that she plans to meet with other G20 countries about crypto regulations in order to create a technology-driven framework to protect crypto assets. Last month, she and US Treasury Secretary Janet Yellen discussed cryptocurrency regulation at the ninth India-US Economic and Financial Partnership meeting.
What are your opinions on the RBI Governor’s warning? What do you think about cryptocurrencies and the next financial crisis? Please let us know in the comments section.
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