The Governor of the Reserve Bank of India (RBI) reiterates his concerns about cryptocurrency, says it could lead to financial instability
Reserve Bank India Once again, Governor Shaktikanta Das was severely attacked CryptocurrencyHe said that digital assets can create a lot of financial instability in terms of the ability of the central bank to determine monetary policy. Das’ comments coincided with his general views and those of the Reserve Bank of India on cryptocurrencies, which have been fairly strict since 2018. Emphasizing his concerns about crypto assets, Das also said that it could lead to a dollarization of the economy.
Cryptocurrencies can create a lot of financial instability in terms of the ability of the central bank to determine monetary policy. It can also have a negative impact on our exchange rate, on capital flows, on the stability of the banking sector and the potential for it to be used as a tool for money laundering and illicit transfer of funds,” he told ET Now in an interview on Tuesday, August 23.
The Governor of the Reserve Bank of India said that he was happy to issue warnings about cryptocurrencies being sent by the central bank, and that many people did not invest in digital assets.
“I think I’m glad we sounded these warning signals and I would like to believe that a large number of people will take note of the warning signs and the concerns that the Reserve Bank has expressed, and anecdotally we realize that many people did not invest in crypto or withdraw from cryptocurrency, and that Thanks to the kind of caution and fears that emanated from the Reserve Bank.”
It is the small investor who loses money by investing in cryptocurrencies, Das said, adding that they may collapse due to the lack of a fundamental base. The prices of something that has no base will not stay high all the time. So it might crash and have crashed. Ultimately in a situation like this, it is the small investor who loses money, and therefore it is a big risk to the small investor as well.”
“Blockchain technology has different applications. The benefits of technology are already being harnessed, and thus we have reported on these concerns. Countries like India are in a different position than advanced economies when there is talk of the dollarization of the economy, if you are sitting at the other end of the world and if you are in the States United, I would be very happy,” he said.
Cryptocurrency is not a good thing that happens to an emerging economy like India, but it could be suitable for provinces like the United States, which are advanced economies, according to the governor of the Reserve Bank of India.
If I were in India, I would not be happy either as an individual or as a central bank. It is not good for our economy to happen. So for emerging market economies, since all cryptocurrencies are denominated in hard currencies and the big dollar, it will not work for countries like India. “It may work for advanced economies,” Shaktikanta Das said.
In response to his comments, Edul Patel, co-founder and CEO of Mudrex, said that while RBI’s position on cryptocurrencies has always been rigid, they are able to create a more transparent environment.
RBI’s position on cryptocurrencies has been a bit rigid since 2018. But cryptocurrencies are able to create a more transparent environment for conducting transactions using the blockchain. It can help small investors to make transactions with lower fees in a safe way. Cryptocurrencies can help diversify portfolios from traditional assets. They can also hedge against inflation in times of financial crisis,” he told News18.com.
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