- RBI Governor Das warns of cryptocurrencies’ threat to global financial stability, particularly in emerging markets.
- Emphasizes the importance of regulating cryptocurrencies and refers to the IMF’s recognition of the need for constraints.
- Highlights the RBI’s commitment to support public-interest-driven innovations amidst crypto regulatory discussions.
The Governor of the Reserve Bank of India (RBI), Shaktikanta Das, stated on October 31 that cryptocurrencies pose a substantial threat to the financial stability of all countries, especially emerging market economies. He stressed the need to assess cryptocurrencies in the context of macroeconomic stability, emphasizing, “Addressing the significant financial stability risk presented by cryptocurrencies is essential.”
He posed the question to those responsible for overseeing this rapidly growing industry: “How will you regulate it, whom will you regulate, and what will you regulate?” In doing so, he pointed to a recent paper by the International Monetary Fund (IMF), which recognized the necessity for countries to contemplate implementing further constraints on cryptocurrencies as the need arises.
Incidentally, the International Monetary Fund (IMF)–Financial Stability Board (FSB) synthesis paper says very clearly that, based on country-specific requirements, especially for emerging markets and developing economies, countries may impose additional restrictions with regard to cryptocurrencies. The risks are well recognised by the IMF-FSB synthesis paper, and the BIS (Bank of International Settlements) paper on cryptocurrencies. Everybody understands and agrees that there are serious risks.
Shaktikanta Das, Reserve bank if indian governor
Additionally, Das expressed skepticism about the broader purpose served by cryptocurrencies, stating that he has not yet encountered a credible explanation for their role. He also questioned what cryptocurrencies can do that central bank digital currencies (CBDCs) cannot achieve, implying that governments and central banks worldwide may not fully embrace the concept of privately issued currencies.
He emphasized the necessity of gaining a comprehensive understanding of these fundamental issues before initiating any regulatory framework for cryptocurrencies. Das stressed, “The whole issue has to be carefully addressed.” Furthermore, he assured the audience that the RBI’s intention is not to stifle innovation; instead, all innovations that serve the public good must be supported and promoted.
In October, G20 finance ministers and central bank governors embraced the IMF-FSB’s roadmap for crypto assets, emphasizing the need to understand associated risks. RBI Governor Das stressed the regulator’s focus on macroeconomic stability over the concerns of crypto businesses, while also highlighting support for innovation that serves the public interest and societal well-being.
