‘Cryptocurrency is a huge risk to financial stability’, Shaktikanta Das in Washington

Washington| Reserve Bank of India (RBI) Governor Shaktikanta Das has described cryptocurrency as a huge risk to financial and monetary stability. He stressed in Washington that this could lead to a situation where the central bank would lose control of the money supply in the economy.

“I believe this is something that should not be allowed to dominate the financial system”, Das said. There is a huge risk in terms of financial stability. There is a huge risk to monetary stability. It also poses a threat to the banking system.

Shaktikanta Das said at the leading think-tank Peterson Institute for International Economics that it (cryptocurrency) can also create a situation where central banks lose control over the money supply in the economy. According to Das, if central banks lose control over the money supply in the economy, how will the cash available in the system be checked.

The RBI Governor further said that in times of crisis, the central bank controls inflation by controlling the money supply. Therefore, cryptocurrency is a big risk in our view.

Shaktikanta Das, in response to a question, said that international understanding should be reached on cryptocurrency, because it also has cross-border transactions. The RBI Governor said, “One should be fully aware of the major risks associated with cryptocurrency”. I think this should not be encouraged. This opinion is not very popular, but I think it is a major concern for central banks around the world, as guardians of financial stability Das said governments are also becoming increasingly aware of the potential downside risks in cryptocurrencies.