Next financial crisis will come from crypto: RBI Guv Das at BFSI summit

Business Standard BFSI Insight Summit 2022: Das said that these currencies have "no underlying whatsoever" and pose a threat to macroeconomic stability

Reserve Bank of India (RBI) governor Shaktikanta Das, on Wednesday, said that the next financial crisis would come from private cryptocurrencies. Speaking at the Business Standard BFSI Insight Summit, Das said that he believed that these privately held virtual currencies need to be banned.

"The term 'cryptocurrency' is a fashionable way of describing what is otherwise a 100 per cent speculative activity," Das said.

Das said that these currencies have "no underlying whatsoever" and pose a threat to macroeconomic stability.

"Mark my words, the next financial crisis will come from private cryptocurrencies...After the FTX episode, don't think we need to say anything more on crypto," he said.

Das further added that private cryptocurrencies were made to bypass the system, and they do not believe in the regulated financial world.

"I am yet to hear any credible argument about what public purpose it serves," he added.

On Central Bank Digital Currency (CBDC), Das said that it provides the facility to "Sweep in, sweep out" the money from the bank automatically.

"24 hours, you can draw CBDC. And if you are carrying excess CBDC, you can deposit it in the bank," Das said.

The CBDC would also save "huge logistical" costs on paper, ink and printing presses. For international transactions, it can lead to instant money transfers, he added.

"The world is becoming more and more digital...in days to come, more and more central banks will embrace digital currency," he said.

Das further clarified that the monetary policy decisions by the RBI do not depend solely on the decision of the US Fed. They are driven by the domestic growth-inflation dynamics.

Highlighting the accuracy of the GDP growth projection for the September quarter of 6.3 per cent and inflation for November projection, Das said that the RBI is refining its inflation and growth projection mechanism.

"Our last few inflation and growth estimates have been near accurate," he added.