According to Reserve Bank of India Governor Shaktikanta Das, private cryptocurrencies will be to blame for the upcoming financial crisis. Governor Das asserted that those private cryptocurrencies pose risks to macroeconomic and financial stability and lack an “underline” value while speaking at the Business Standard BFSI Insight Summit.
“We have been emphasizing cryptocurrency’s significant inherent risks to the stability of our macroeconomic and financial systems after viewing the most recent FTX episode. In my opinion, we don’t need to say anything else,” the RBI governor declared.
Governor Das added that the main concern with cryptocurrencies is that they have no underline, unlike any other asset or product.
Das claimed that since private cryptocurrencies don’t accept the central bank’s currency or follow financial regulations, they started by avoiding the system to “break the system.” “…they want to get around and overthrow the system.”
Second, there is no underline in cryptocurrency. Thirdly, all of it is speculation.
Governor Das emphasized the need to ban cryptocurrencies, saying that if they are allowed to develop, “mark my words, the next financial crisis will come from private cryptocurrencies.”
The governor of the RBI continued by describing the distinction between UPI and CBDC. He also discussed the value of digital currency.
According to the governor of the RBI, CBDC is a “currency” in and of itself, whereas UPI is a payment system. Second, UP uses banks as intermediaries, whereas CBDC functions similarly to cash. According to him, the latter features an automated “sweep-in and sweep-out facility,” which allows users to return unused CBDC to their bank accounts after 24 hours.
Thirdly, CBDC is less expensive than printed notes, which require extensive logistics and high printing expenses.
Additionally, CBDC permits immediate money transactions between two nations. According to Das, the “currency of the future” is CBDC.
Das was upbeat about the nation’s economic situation.
At the Business Standard-hosted BFSI Insight Summit 2022, he stated that while India’s economy is fundamentally sound, external influences will inflict some “damage” on it.
According to him, the majority of the 70 fast-moving indications that the RBI monitors are in the “green box.”
He added that the issues are in the external sector, plagued by recession-related anxiety or obvious evidence of slowing global growth. He said the effects of foreign demand would “dent” the economy.
The RBI recently decreased its earlier 7% growth prediction for FY23 to 6.8%.
According to Das, the government and the central bank have taken a “highly synchronized strategy” to control the out-of-control inflation rate.
According to the RBI Governor, base effects make the two growth numbers appear different even if there is no significant difference between deposit and credit growth in absolute terms.