Cryptocurrencies Pose Risks to Emerging Markets, Central Bank’s Stand Remains Unchanged: RBI Governor

Cryptocurrencies can pose significant risks to emerging markets, the Reserve Bank of India (RBI) chief said on Thursday, cautioning that the central bank’s stand on the issue remains unchanged despite wider acceptance in other countries.

“Our position, my position and the RBI’s position on this (cryptocurrencies) remains unchanged irrespective of who does what,” Shaktikanta Das said in response to a question about the US securities regulator approving the first US-listed exchange traded funds to track Bitcoin, a move that could bolster the world’s largest cryptocurrency and the broader crypto industry.

“For emerging market economies and for advanced economies also, travelling down that path will create huge risks which will be very difficult to contain going forward,” Das added.

Cryptocurrencies have no underlying value and pose risks for macroeconomic and financial stability, the central bank chief has repeatedly said.

RBI Governor Das highlighted the benefits of the central bank digital currencies, or e-rupee in India’s case, and said the central bank is working on “programmability” of the e-rupee to enable cash transfers, such as targeted transfers to farmers.

The central bank also plans to start pilots for using the e-rupee in new segments in the wholesale space, he added.

In December, Indian banks disbursed some employee benefits through the digital rupee, helping the RBI meet its target of one million daily transactions by end-2023, three sources directly familiar with the development said last week.

The RBI and the National Payments Council of India are in talks with several countries for adoption of India’s payments system Unified Payments Interface for cross-board transactions, the governor said Thursday.

Das also said the central bank is closely looking at model-based artificial intelligence lending by financial entities.

© Thomson Reuters 2024