Cryptocurrency Dilemma: Risks on Financial Stability

RBI Governor Shantikanta Das warns about the risks posed by cryptocurrencies to financial and monetary stability. Addressing a think tank, he emphasized the potential loss of central bank control over money supply due to crypto dominance. He advocates for international consensus on regulatory measures.

Reserve Bank of India Governor Shantikanta Das issued a stern warning regarding the significant risks cryptocurrencies pose to financial and monetary stability. Speaking at the Peterson Institute for International Economics, Das underscored concerns that such digital assets might undermine central bank control over money supply.

Das argued that cryptocurrencies should not dominate the financial system, citing risks to the banking sector and potential destabilization of the monetary framework. He called for an international consensus on regulatory measures, stressing that the cross-border nature of crypto transactions necessitates a collective approach to mitigate risks.

India, under its G20 presidency, has made strides in forming a global understanding of the crypto ecosystem. Das highlighted the importance of cautious and stringent handling of cryptocurrencies, emphasizing that they should not evolve into a parallel currency system, which could threaten the current financial order.

(With inputs from agencies.)