The governor of India’s central bank, the Reserve Bank of India (RBI), has warned that the next financial crisis will come from crypto-currencies, like bitcoin and ether. The central bank chief added that crypto-currencies pose “enormous inherent risks“to India’s macroeconomic and financial stability.
India’s central bank warns that crypto-currencies could cause the next financial crisis.
Reserve Bank of India (RBI) Governor Shaktikanta Das warned of the danger of crypto-currencies on Wednesday. The central banker warned:
Crypto-currencies have … huge inherent risks to our macroeconomic and financial stability.
The RBI is primarily concerned about crypto-currencies with no underlying value, Shaktikanta Das said, noting that crypto-currencies are “speculative” and should be banned.
Indian authorities call crypto-currencies “private“all non-government issued crypto-currencies, such as bitcoin and ether. Commenting on crypto trading, Das said:
This is a 100 percent speculative activity, and I would still stand by my opinion that it should be banned … because if it is allowed to grow – if you try to regulate it and let it grow – please mark my words, the next financial crisis will come from private crypto-currencies.
Meanwhile, India is trying to launch its own central bank digital currency (CBDC). The RBI recently launched pilots of wholesale and retail digital rupees.
Das explained that CBDCs can speed up international money transfers and reduce the need for logistics, including the printing of bills. Earlier this month, RBI Deputy Governor T. Rabi Sankar said the Indian central bank’s digital currency can do everything that crypto-currencies can do.
The Indian government is also working on the country’s crypto policy. Earlier this week, the government provided the Lok Sabha, the lower house of India’s parliament, with an update on its crypto-currency bill that was scheduled to be discussed in the winter session of parliament last year.
Meanwhile, Indian Finance Minister Nirmala Sitharaman said the government plans to discuss crypto-currency regulation with G20 countries to establish a technology framework for crypto-currencies. Last month, she and U.S. Treasury Secretary Janet Yellen discussed crypto-currency regulation at the ninth India-U.S. Economic and Financial Partnership meeting.