Cryptocurrencies, the cause of next financial crisis: RBI Guv

Mumbai: While speaking at the BFSI (Banking, Financial Services and Insurance) Insight Summit on Wednesday, Reserve Bank Governor Shaktikanta Das warned that the next financial crisis will emerge out of the growing private cryptocurrencies.

Further, the Governor reiterated the central bank's demand for a complete ban on crypto as, such instruments do not have any underlying value and are speculative in nature.

"It's a 100 percent speculative activity, and I would still hold the view that it should be prohibited. If you try to regulate it and allow it to grow, please mark my words, the next financial crisis will come from private cryptocurrencies," Shaktikanta Das said.

He added that cryptocurrencies have huge inherent risks from macroeconomic and financial stability perspective.

The Governor cited the recent crash of FTX, a US based crypto exchange to illustrate the threat posed by such instruments.

Further, he pointed out that the value of crytpocurrencies have shrunk and there is no underlying value for the market-determined price of coins.

Meanwhile, the RBI has issued the central bank digital currency (CBDC), citing which the Governor said that, digital money is the future and central bank efforts are not motivated by a fear of missing out on the action created by the private cryptocurrencies.

The Governor said that RBI is working in accordance with the government to tame inflation, and added that the central bank’s move to hike repo rate and liquidity actions are complemented by government's steps on the supply side.