homecryptocurrency NewsRBI Governor Shaktikanta Das says next financial crisis might emerge from cryptocurrencies
cryptocurrency | Dec 21, 2022 12:14 PM IST

RBI Governor Shaktikanta Das says next financial crisis might emerge from cryptocurrencies

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He mentioned that there are three main concerns with Cryptocurrency. Firstly, the private crypto owes their origin to breaking the system and they do not believe in the regulated financial world. Secondly, cryptocurrency has absolutely no underlying basis and there is also no clarity on what public good or purpose they serve. Thirdly, it’s a 100 percent speculative activity hence making it a risky asset.

The majority of central bankers across the world have been wary of cryptocurrencies. The Reserve Bank of India Governor Shaktikanta Das has reiterated caution about the unregulated currency and warned that it presents a "huge inherent risk for our macroeconomic and financial stability,".

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While speaking at the BFSI Insight Summit organised by the Business Standard, Das mentioned that the world has seen a lot happening in the world of crypto in the past year.
“I hold the view that it should be prohibited because if it is allowed to grow with regulations the next financial crisis will come from private cryptocurrency,” Das added.
Stating data, Das mentioned that cryptocurrency is now valued at 140 billion US dollars, which is a loss in valuation of approximately 40 billion US dollars this year.
Das' 3-main concerns
The RBI Governor mentioned that there are three main concerns with cryptocurrency.
Firstly, private crypto owes its origin to 'breaking the system' and they do not believe in the regulated financial world.
Secondly, cryptocurrency has absolutely no underlying basis and there is also no clarity on what public good or purpose they serve.
Thirdly, it’s a 100 percent speculative activity hence making it a risky asset.
RBI Governor promotes CBDC
Das also spoke about RBI’s first pilot for retail e-rupee, its version of the central bank digital currency (CBDC), which was launched on December 1. The pilot will cover select locations in a closed user group comprising participating customers and merchants.
The Governor said that CBDC is the currency of the future and further painted out the benefits explaining that the Unified Payments Interface (UPI) involves intermediation of banks whereas CBDC is like currency notes with that CBDC also has an automatic sweep in and out facility.
He further added that logistics for CBDCs will be much simpler and this will propel India to the forefront of digital currency in this century.
Das on inflation flight and rate hike decision making
On inflation, the RBI Governor said that everyone has their own space in today's international economic world and the US remains a major player but the term "big daddy" has been left behind.
"Although external factors including US Fed actions are studied but only as one of the factors and India’s monetary policies are governed and driven by our own growth-inflation dynamics," he elaborated.
Das further mentioned that the RBI constantly keeps fine-tuning models of inflation forecasting and the last few inflation and growth estimates have been near accurate.
"Getting the direction of inflation and speed of movement is important, not just getting the number right," he said.
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