'Next Financial Crisis Will Come From Private Cryptocurrencies, Should Be Banned,' Warns RBI Governor

Barely a few days after India¡¯s Finance Minister Nirmala Sitharaman mentioned that the RBI wants to ban crypto but needs global support to implement it, the Reserve Bank of India governor Shaktikanta Das has said today that the next financial crisis would come from private cryptocurrencies.

"Cryptocurrencies should be banned"

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Speaking at the Business Standard BFSI Insight Summit, Das said that he believed that these privately held virtual currencies need to be banned.

"The term 'cryptocurrency' is a fashionable way of describing what is otherwise a 100% speculative activity," Das said.

Governor Das said that these currencies have "no underlying whatsoever" and pose a threat to macroeconomic stability.

"Mark my words, the next financial crisis will come from private cryptocurrencies... After the FTX episode, don't think we need to say anything more on crypto," he said.

Das further added that private cryptocurrencies were made to bypass the system, and they do not believe in the regulated financial world.

Also Read: Ex-RBI Governor Raghuram Rajan Predicts 2023 As Difficult Year

"What Public Purpose Does Crypto Serve"?

"I am yet to hear any credible argument about what public purpose it serves," he added.

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On Central Bank Digital Currency (CBDC), Das said that it provides the facility to "Sweep in, sweep out" the money from the bank automatically.

"24 hours, you can draw CBDC. And if you are carrying excess CBDC, you can deposit it in the bank," the RBI governor said.

The CBDC would also save "huge logistical" costs on paper, ink and printing presses. For international transactions, it can lead to instant money transfers, he added.

"The world is becoming more and more digital...in days to come, more and more central banks will embrace digital currency," he said, as per a Business Standard report.

Mentioning About RBI's Rate Hikes

Governor Das further clarified that the monetary policy decisions by the RBI do not depend solely on the decision of the US Fed. They are driven by the domestic growth-inflation dynamics.

Highlighting the accuracy of the GDP growth projection for the September quarter of 6.3% and inflation for November projection, governor Das said that the RBI is refining its inflation and growth projection mechanism.

"Our last few inflation and growth estimates have been near accurate," he added, as per the report.

Also Read: How RBI Creates & Distributes Indian Rupee Banknotes

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