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The Reserve Bank of India (RBI), the central bank of India, considers cryptocurrencies to be an “apparent danger”. However, the financial stability risks posed by crypto assets currently appear to be limited.
The Reserve Bank of India (RBI) released the 25th issue of the Financial Stability Report (FSR) on Thursday. RBI Governor Shaktikanta Das wrote:
Cryptocurrencies are obviously dangerous. Everything that draws value based on makebelieve, even if it doesn’t have an underlying one, is just speculation with a sophisticated name.
“Technology is supporting the reach of the financial sector and we need to take full advantage of it, but we need to prevent the potential for financial stability,” said the RBI chief.
A report by the Central Bank of India examines the financial stability risks posed by crypto assets, citing various studies, including work by the Financial Stability Board (FSB). The report states:
Due to its small overall size (0.4% of global financial assets), the risk from crypto assets to financial stability seems to be currently limited.
He added that cryptography “has limited interoperability with traditional financial systems.”
Nevertheless, add the report as follows:
However, as the ecosystem that supports these assets and their growth evolves, the risks involved may increase.
The report also describes Stablecoin and the Central Bank Digital Currency (CBDC). The RBI states: “The risk of Stablecoin, which claims to maintain a stable value against existing fiat currencies, requires special scrutiny.”
The RBI’s statement on financial stability and cryptography is: Christine Lagarde, President of the European Central Bank (ECB). “Cryptocurrency assets and decentralized finance (defi) can pose a real risk to financial stability,” she said in June. “This is especially true if the crypto asset market and services continue to grow rapidly … and the interconnection between both the traditional financial sector and the broader economy will be strengthened.”
What do you think of the Central Bank of India’s comments? Let us know in the comments section below.
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