Shaktikanta Das, Governor of the Reserve Bank of India, stated on Friday that cryptocurrencies should be banned in India because their growing popularity will result in the RBI losing control over the Indian economy.
In a press conference, Das stated that legalizing cryptocurrency in India could result in a “dollarization” of the national economy. According to Das, in order to create a lucrative environment for the digital rupee, the digital currency controlled by the Reserve Bank of India, banks must maintain robust IT systems and should ensure data privacy. Cryptocurrency policy is reflected in Shaktikanta Das’ comments.
Further explaining the reason behind the ban, Das explained that besides the commonly known threat of terror funding, cryptocurrency’s definition is unclear. “Some call it an asset, while others refer to it as a financial product, and no matter what it is called, it should have some underlining but Crypto has no underline.”
Moreover, Das pointed out that cryptocurrency prices are volatile, which makes them unreliable. In terms of volatility in prices, a particular crypto’s price can go down or up as it is based on a make-believe concept that a crypto’s price can either go up or down. The point is, any product that does not have any underline with a valuation that is entirely based on make-believe is nothing but pure speculation or it can be simply called a gamble.”
The Indian government does not allow gambling, and if cryptocurrency is to be considered a gambling activity, then there should be specific rules for how it should be treated. Crypto is not a financial product, so to argue that it is a financial product or asset is entirely misplaced.”
“Cryptocurrencies have the potential to serve as a medium of exchange for transactions,” he said. When it grows to 20 percent of the transactions, that means it is not happening by the central bank, and it is issued by private companies all over the world.”
By using crypto, RBI will lose control of the money supply in the economy if transactions begin to take place via crypto. As a result, the RBI’s authority to decide on monetary policy and maintain liquidity levels will be undermined. As a result, it will result in the dollarisation of the economy.”
Earlier this year, the Reserve Bank of India (RBI) had predicted that the whole hullabaloo around cryptocurrency was going to collapse and thus looking at the failure of the FTX, there is no doubt that the cryptocurrency’s future does not look bright.
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