Cryptocurrencies will be the reason behind next financial crisis: RBI Governor Shaktikanta Das
- ‘Cryptocurrency has certain huge inherent risks for our macroeconomic and financial stability,’ Shaktikanta Das, Governor of the Reserve Bank of India said
Shaktikanta Das, Governor of the Reserve Bank of India, has predicted that the next financial crisis will happen due to private cryptocurrencies. Speaking at the Business Standard BFSI Insight Summit, Governor Das claimed that those private cryptocurrencies have no “underline” value and pose risks for macroeconomic and financial stability.
"Cryptocurrency has certain huge inherent risks for our macroeconomic and financial stability, and we have been pointing it out. After looking at the latest episode of FTX. I don't think so we need to say anymore," the RBI governor said.
Governor Das further said that, unlike any other asset, or any other product, "our main concern about the cryptocurrencies is that it does not have any underline whatsoever".
Das stated that private cryptocurrencies owe their origin to bypassing the system to "break the system" as they don't belive in the central bank's currency or regulate the financial world. "....they want to bypass and beat the system".
Secondly, cryptocurrencies have no underline. Third, it is a 100% speculative activity.
Das reiterated that cryptocurrencies should be prohibited because if it is allowed to grow then, "mark my words, the next financial crisis will come from private cryptocurrencies," Governor Das claimed.
RBI governor further spoke about the difference between UPI and CBDC. He also spoke about the significance of digital currency.
The RBI governor asserted that UPI is a payment system whereas CBDC is a "currency" itself. Secondly, UP involves the intermediation of banks but CBDC is like currency notes. The latter has an automated "sweep-in and sweep-out facility, that means in 24 hours, a user can put back the CBDC in their bank account if not used," he said.
Thirds, CBDC is inexpensive, unlike printed notes which require huge logistics and costs to print them.
Moreover, CBDC also allows instant money transfers between two countries. Das called CBDC the "currency of the future".
Das expressed optimism regarding economic activity in the country.
During the BFSI Insight Summit 2022 organised by Business Standard, he said, underlying economic activity in India continues to be strong, but external factors will cause some "dent" in the economy.
He said the RBI tracks 70 fast-moving indicators and most of them are in the "green box".
It is the external sector, mired by fear of recession or clear visibility about slowing growth in a large part of the world, where the challenges lie, he said, adding that the impact of external demand will "dent" the economy.
Recently, RBI revised its growth estimate for FY23 to 6.8% from the earlier 7%.
On inflation, he said there has been a "very coordinated approach" between the government and the central bank to tame the runaway number, Das said.
There is no big gap between deposit and credit growth in absolute terms, and base effects make the two growth numbers look divergent, the RBI Governor said.
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Business NewsEconomyCryptocurrencies will be the reason behind next financial crisis: RBI Governor Shaktikanta Das
First Published:21 Dec 2022, 12:44 PM IST
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