RBI governor: Next financial crisis will come from crypto
MUMBAI: RBI governor Shaktikanta Das has said that the next financial crisis will come from cryptocurrencies and that the developments at crypto exchange FTX have vindicated the central bank’s stance.
“We firmly believe that cryptocurrencies have no underlying value and have a huge inherent risk for our macroeconomic and financial stability,” said Das. The RBI governor was speaking at a BFSI summit organised by the Business Standard in Mumbai. His comments come in the wake of the collapse of FTX, which resulted in investors losing millions of dollars. “The developments over the last year, including the latest events around FTX, I do not think we need to say anything more about our stance. Time has proved the worth of cryptocurrencies,” said Das.
The RBI’s concerns arise from the fact that crypto does not have any underlying asset. “I think the term crypto is a fashionable way of describing what a 100% speculative activity is,” Das said.
Das said some people talked about allowing crypto after subjecting it to regulation. However, Das questioned how something could be regulated when its origin was based on bypassing the system. “They (crypto proponents) do not believe in central bank currency, they don’t believe in the regulated financial system. I am yet to hear any credible argument about what public good it serves,” said Das.
“I still hold the view that it should be prohibited because if it is allowed to grow, please mark my words, the next financial crisis will come from cryptocurrencies,” said Das.
According to the governor, RBI’s digital currency was not aimed at competing with cryptocurrency or developed because of a fear of missing out. He said that there were several use cases, including that of cross-border payments with other digital currencies.
“We firmly believe that cryptocurrencies have no underlying value and have a huge inherent risk for our macroeconomic and financial stability,” said Das. The RBI governor was speaking at a BFSI summit organised by the Business Standard in Mumbai. His comments come in the wake of the collapse of FTX, which resulted in investors losing millions of dollars. “The developments over the last year, including the latest events around FTX, I do not think we need to say anything more about our stance. Time has proved the worth of cryptocurrencies,” said Das.
The RBI’s concerns arise from the fact that crypto does not have any underlying asset. “I think the term crypto is a fashionable way of describing what a 100% speculative activity is,” Das said.
Das said some people talked about allowing crypto after subjecting it to regulation. However, Das questioned how something could be regulated when its origin was based on bypassing the system. “They (crypto proponents) do not believe in central bank currency, they don’t believe in the regulated financial system. I am yet to hear any credible argument about what public good it serves,” said Das.
“I still hold the view that it should be prohibited because if it is allowed to grow, please mark my words, the next financial crisis will come from cryptocurrencies,” said Das.
According to the governor, RBI’s digital currency was not aimed at competing with cryptocurrency or developed because of a fear of missing out. He said that there were several use cases, including that of cross-border payments with other digital currencies.
