Growth of private cryptocurrencies may precipitate next financial crisis: RBI Governor

Reserve Bank Governor Shaktikanta Das warned on Wednesday that allowing private cryptocurrencies to develop could precipitate the next financial crisis.

Speaking at the BFSI Insight summit in Mumbai, Das also said the government and the central bank were working in a coordinated manner to bring inflation under control and the Center was “equally serious” about limiting rising prices. .

On private cryptocurrencies like Bitcoin, Das reiterated the RBI’s demand for a complete ban, saying such instruments have no underlying value and are speculative in nature.

“It is 100% speculative activity, and I would always be of the view that it should be banned. If you try to regulate it and let it grow, please mark my words, the next financial crisis will come from cryptocurrencies. private currencies,” he said. said.

“Cryptocurrencies pose enormous inherent risks to macroeconomic and financial stability (outlook) and we have highlighted this,” he added.

The RBI Governor further stated that developments over the past year which include the latest crash of cryptocurrency exchange FTX which has been called one of the biggest financial frauds in the world. history of the United States, illustrate the threat posed by such instruments.

“After all this, I don’t think we need to say more about our position,” Das remarked, adding that the valuation of private cryptocurrencies has fallen and there is no value underlying for the market-determined price.

Regarding Central Bank Digital Currency (CBDC), Das said such fiat digital currency is the future and central bank efforts are not driven by fear of missing out on crypto-created action. -private currencies.

He said the Indian CBDC pilot is different from having a UPI wallet, and added that it has some unique features like the ability to return the money in 24 hours as well.

Meanwhile, in remarks on inflation, Das said RBI measures such as rate hikes and liquidity actions were complemented by government supply-side measures.

“I must say that to control inflation, there has been a very coordinated approach between the central bank and the central government,” Das said.

“The government is also just as serious about controlling inflation…everyone is interested in bringing inflation down and I’m sure the government will also be just as keen on inflation being brought down,” he said. he added.

The governor also said that this government’s final full budget before the 2024 general election will have no bearing on the conduct of monetary policy.

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