Crypto Assets
RBI Das says crypto can't be allowed to dominate, shouldn't be encouraged
This story was originally published at 09:37 IST on 26 October 2024
Register to read our real-time news.Informist, Saturday, Oct. 26, 2024
NEW DELHI – Reserve Bank of India Governor Shaktikanta Das has again come out heavily against crypto assets, saying they should not be encouraged and cannot be allowed to dominate the financial system.
"Currency issuance is a sovereign function... The larger question is whether we are comfortable with crypto, which has characteristics of being a currency, whether we are comfortable with a private currency system in parallel to the fiat currency," Das said late on Friday.
"I am actually of the opinion that this is something which should not be allowed to dominate the financial system because it has huge financial stability risks, huge monetary stability risks. It also poses risks to the banking system. It also may create a situation where the central bank may lose control of money supply in the economy. And if the central bank loses control of money supply in the economy, how does the central bank check liquidity available in the system? And how does the central bank control inflation by squeezing money supply or loosening money supply in times of crisis?"
The Indian central bank chief was speaking in Washington, DC at an event hosted by Peterson Institute for International Economics. The RBI governor is in the US capital for the annual meeting of the International Monetary Fund and World Bank.
Das' comments come amid a wait for the government to release a discussion paper on crypto as India weighs whether they should be regulated. While gains from trade in crypto are taxed, it is not accepted as legal tender and the RBI has actively voiced its concerns about the use of crypto in India as well as abroad, with the central bank in favour of banning it outright.
"There has to be an international understanding on this issue because the transactions are cross-country. It is not something, I feel, which should be encouraged. This view is not a very popular view, but as custodians of financial stability, it is a major concern for central banks world over," Das added Friday.
According to reports, an inter-ministerial group that includes representatives from India's regulators is looking into the matter after the Indian G20 Presidency reached an agreement in 2023 to develop an international understanding on crypto. While the Financial Stability Board and the International Monetary Fund jointly proposed a roadmap and framework for disclosures and minimum guidelines, they also warned against a blanket ban due to the difficulty in enforcing such a step.
Crypto apart, the central bank chief reiterated on Friday that India is continuing to work to link its Unified Payments Interface fast payments system with that of other countries.
"The other effort that is happening is under the aegis of BIS (Bank for International Settlements). Recently, the ASEAN (Association of Southeast Asian Nations) countries and India signed an agreement to move forward on Project Nexus, which is an effort to network the fast payments systems of India and these five ASEAN countries. The BIS is trying to do similar initiatives in other parts of the world," Das said.
Project Nexus aims to standardise how fast payments systems of different countries can be linked together. According to Switzerland-based Bank for International Settlements, the fourth phase of Project Nexus will see the RBI join the central banks of Malaysia, Philippines, Singapore, and Thailand as well as local operators of fast payments systems. End
Reported by Siddharth Upasani
Edited by Namrata Rao
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.
To read more please subscribe
Share this Story:
