Next financial crisis will come from private cryptocurrencies, warns RBI Governor Shaktikanta Das

Das also pointed out the recent fall of the cryptocurrency exchange FTX. 

Reserve Bank of India (RBI) Governor Shaktikanta Das
Reserve Bank of India (RBI) Governor Shaktikanta Das

The Reserve Bank of India (RBI) Shaktikanta Das on Wednesday said that the next financial crisis will come from private cryptocurrencies.

Das spoke at a media summit where he pointed out the cons of cryptocurrencies. “Cryptocurrency poses risks for macroeconomic and financial stability. Private cryptocurrencies owe their origin to bypass the system and break the system. The total value of crypto has come down to $140 billion and $40 billion got wiped out. They have no underline and I yet have to hear good arguments about what public good it serves and that it is a speculative activity,” Das added.

Meanwhile, Das stressed the need for the Central Bank of Digital Currency (CBDC) and claimed that CBDC needs no intermediaries. “Logisticswise CBDC will be much faster and it is a currency in itself,” Das informed.

Furthermore, the rise in the popularity of cryptocurrencies in recent years has alarmed the RBI as well. According to the RBI, the proliferation of cryptocurrency assets poses serious dangers for money laundering and terrorism financing. “We firmly believe that cryptocurrencies have absolutely no underline. Cryptocurrencies have certain huge inherent risks for microeconomic and financial stability.”

Das noted that the creation of a digital rupee will assist the Indian economy in minimise operating expenses associated with physical cash management, improving the efficiency of payment settlements, and stimulating innovation in cross-border payments.

Das also pointed out the recent fall of the cryptocurrency exchange FTX. 

While last month, Shaktikanta Das cleared the air by stating that the pilot CBDC tends to leave no trace with a bank and that there is no need to inculcate fear psychosis in people’s minds regarding confidentiality. 

RBI earlier informed that for all individuals, companies, governments, and other entities that can convert it into bank money or cash, CBDC will serve as a means of exchange, legal tender, and a reliable store of value. 

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First published on: 21-12-2022 at 12:35 IST
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