The Governor of the Reserve Bank of India Shaktikanta Das has said that the next financial crisis might emerge from cryptocurrencies. While speaking at the BFSI Insight Summit, the RBI Governor elaborated and cautioned about the unregulated currency.
He warned that it presented a huge inherent risk for our macroeconomic and financial stability. Mr. Das mentioned that the world has seen a lot happening in the world of crypto in the past year.
He also told that the majority of central bankers across the world have been wary of cryptocurrencies. The RBI Governor mentioned that there are three main concerns with cryptocurrency. He said, firstly, private crypto owes its origin to ‘breaking the system’ and they do not believe in the regulated financial world. Secondly, cryptocurrency has absolutely no underlying basis and there is also no clarity on what public good or purpose they serve, he added.
Thirdly, it’s a cent per cent speculative activity, hence, making it a risky asset, said Mr.Das. Stating data, he mentioned that cryptocurrency is now valued at 140 billion US dollars, which is a loss in valuation of approximately 40 billion US dollars this year.
RBI Governor also spoke about RBI’s first pilot for retail e-rupee, its version of the Central Bank Digital Currency (CBDC), which was launched on the 1st of December. The pilot will cover select locations in a closed user group comprising participating customers and merchants.
The Governor said, CBDC is the currency of the future and further painted out the benefits explaining that the Unified Payments Interface involves intermediation of banks whereas CBDC is like currency notes with that CBDC also has an automatic sweep in and out facility.
He further added, logistics for CBDCs will be much simpler and this will propel India to the forefront of digital currency in this century.
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