Reserve Bank of India (RBI) Governor Shaktikanta Das has expressed concerns about the risks posed by cryptocurrencies to emerging market economies. Speaking at the World Economic Forum in Davos, Das stated that instruments like bitcoin, which lack underlying value, could be a significant threat to currency and monetary stability. While some individuals globally may think that the cryptocurrency “party” has recommenced, the significant risks posed by these instruments, lacking underlying value, are substantial for emerging market economies, Das said.
According to an ET report, Das also highlighted the potential for money laundering and terror financing associated with cryptocurrencies.Das’s comments come just days after the US Securities and Exchange Commission (SEC) approved bitcoin exchange traded funds (ETFs), causing cryptocurrency prices to surge globally.
Regarding the SEC’s decision, Das emphasized that each country’s regulator knows best what is suitable for their nation. He stated, “So far as India is concerned, we see a lot of risks, and it is not necessary for us to simply adopt what somebody else does.”Over the years, Das has consistently asserted that cryptocurrencies pose a tangible threat to currency and monetary stability, potentially serving as the catalyst for the next significant global financial crisis.
Das cautioned against celebrating the recent resurgence of cryptocurrencies, noting that they had previously experienced a collapse. He stressed the importance of recognizing the significant risks involved, particularly for emerging market economies. In response to a question on the future of cryptocurrencies in India, Das gave a short reply — “very bad” — before reiterating his concerns.
According to an ET report, Das also highlighted the potential for money laundering and terror financing associated with cryptocurrencies.Das’s comments come just days after the US Securities and Exchange Commission (SEC) approved bitcoin exchange traded funds (ETFs), causing cryptocurrency prices to surge globally.
Regarding the SEC’s decision, Das emphasized that each country’s regulator knows best what is suitable for their nation. He stated, “So far as India is concerned, we see a lot of risks, and it is not necessary for us to simply adopt what somebody else does.”Over the years, Das has consistently asserted that cryptocurrencies pose a tangible threat to currency and monetary stability, potentially serving as the catalyst for the next significant global financial crisis.
Das cautioned against celebrating the recent resurgence of cryptocurrencies, noting that they had previously experienced a collapse. He stressed the importance of recognizing the significant risks involved, particularly for emerging market economies. In response to a question on the future of cryptocurrencies in India, Das gave a short reply — “very bad” — before reiterating his concerns.
In addition to discussing cryptocurrencies, Das addressed the issue of food inflation in India. While acknowledging the country’s robust GDP growth, he expressed concern about the volatile nature of food prices. Das attributed this volatility to global supply chain issues and unexpected weather events. He pointed out that heavy rains and floods had impacted vegetable prices in the past year. Although the RBI cannot control such factors, Das affirmed that the central bank must respond to them.
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Despite the challenges posed by food inflation, Das expressed satisfaction with the trajectory of core inflation, which excludes volatile food and fuel components.