The head of the Reserve Bank of India states cryptocurrencies lack any underlying value, and should be banned before causing another financial crisis
Shaktikanta Das, governor of the Reserve Bank of India, warned that cryptocurrencies present huge inherent risks for macroeconomic and financial stability, able to cause another financial crisis.
Speaking at the event, Das mentioned the recent collapse of FTX as an example of the innate dangers of so-called “private” cryptocurrencies. The head of the central bank of India argued that the decentralised crypto industry shouldn’t be allowed to grow. Crypto trading is purely speculative and presents no real-world value.
On the other hand, the Indian central bank doesn’t reject the benefits of blockchain technology, having recently introduced its own digital rupee. The pilot program for CBDC for retail use started in selected Indian cities on Dec. 1. Certain users are already able to perform digital rupee transactions via apps and mobile wallets.
Unlike decentralised cryptocurrencies, Das believes CBDCs can offer some real-world benefits. For instance, they can expedite international money transfers and reduce the need for logistics, such as printing notes.
Other central banks across the globe previously said cryptocurrencies did not pose a major risk to the economy. However, as the asset class is growing, more experts warn of the potential macroeconomic impact, especially if cryptocurrencies remain unregulated.
Therefore, the Indian government is currently working on cryptocurrency legislation. It could prohibit some activity related to private digital currencies and create the legal framework for CBDC.